INFLATION | Nigeria in uncharted territory

by on November 19, 2016

The NBS on Monday released new data showing that the Consumer Price Index, a measure of inflation, rose to a 94-month high of 18.3 percent in October. The 18.3 percent inflation rate, which is about 0.48 percent higher than the 17.9 percent recorded in September, is the highest since January 2009 when the NBS started publishing the revised CPI.

The bureau attributed the increase in inflation rate to pressures recorded in some sub-indexes such as housing, electricity, gas, water, lubricants for personal transport and education. It explained that while the prices of food items such as bread, cereals, fish and meat also recorded significant increases, fruit prices moderated during the period.

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The report added that the least growth pace recorded in October was experienced in communication (5.7 percent), restaurants and hotels (9.4 percent), and recreation and culture (10.3 percent). The NBS noted that the urban index rose by 19.9 percent (year-on-year) in October from 19.5 percent recorded in September, while the rural index increased by 16.95 percent in October from 16.4 percent in the previous month.

All the drivers of the CPI point to the fact that we are yet to reach the peak of this inflationary trend. Perhaps the biggest point to note is that an increase in the pump price of petrol looms, as well as a scarcity of essential commodities. Taking these two factors into consideration, we predict that inflation will experience a pronounced spike in the December and January 2017 inflation numbers.

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