Rising insecurity, border closure, increases in Value Added Tax (VAT), pump price of fuel, electricity tariffs and exchange rates have been blamed for the inflation rate which hit 14.9 percent in November, 2020.
This represents the 15th consecutive month-on-month (MoM) rise in inflation since September 2019 when it stood at 11.24 percent.
In its latest consumer price index, CPI, report, the National Bureau of Statistics (NBS) said: “The consumer price index, (CPI) which measures inflation increased by 14.9 percent (year-on-year) in November 2020. This is 0.66 percentage points higher than the rate recorded in October 2020 (14.23 percent).Increases were recorded in all COICOP divisions that yielded the Headline index.
“On MoM basis, the Headline index increased by 1.60 percent in November 2020. This is 0.06 percentage points higher than the rate recorded in October 2020 (1.54 percent).
“The urban inflation rate increased by 15.47 percent (year-on-year, YoY) in November 2020 from 14.8 percent recorded in October 2020, while the rural inflation rate increased by 14.3 percent in November 2020 from 13.7 percent in October 2020.”
On food index the Bureau noted:” The composite food index rose sharply by 18.3 percent in November 2020 compared to 17.4 percent in October 2020.
“This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fish, Fruits, Vegetables and Oils and fats.
On MoM basis, the food sub-index increased by 2.04 percent in November 2020, up by 0.08 percent points from 1.96 percent recorded in October 2020.”
Commenting on the development, Analysts at Vetiva Research Capital Management Limited said: “We attribute this to underlying supply-side shocks from the continued closure of land borders, a weaker Naira and higher fuel prices. The hike in retail Premium Motor Spirit (PMS) pump price to N170 contributed to the build-up in headline inflation for the month, which rose by 1.6 percent MoM (October 2020: 1.5 percent), its fastest in 42 months. The passthrough of higher fuel prices into transport costs elevated food inflation for the fifteenth consecutive month to 18.3 percent YoY (October 2020: 17.4 percent), amid pre-existing border restrictions.
“2020 has indeed been a tough year for consumers and producers alike from the spillovers of border closures to VAT hike, COVID-related distortions, short-lived electricity tariff hikes and monthly petrol pump adjustments. For the first time since 2016, consumer prices are set to undergo 12 consecutive months of inflationary pressures in a given year. In both years, we witnessed adjustment in the exchange rates however, this year has been more peculiar, with the disruptions in the agricultural sector and removal of fuel subsidies.”
On his part, Financial Economist and Professor of Capital Market at Nasarawa State University, Uche Uwaleke, said, “The NBS inflation numbers for the month of November is a reflection of the lingering impact of COVID’19 as well as legacy issues of insecurity in many parts of the country, border closure, increase in VAT, pump price of fuel, electricity tariffs and Exchange rates.