Despite the economic downturn leading to Federal and states governments being unable to finance development projects, states being unable to pay salaries and private companies laying off staff in droves, inflation continues its upward movement, rising to 15.6 percent in June.
The last time inflation was this high was 2004 when it went as high as almost 23 percent.
But it appears that the trend will be sustained especially with recent decision of Central Bank of Nigeria (CBN) to allow market forces determine value of the naira, which has pushed official exchange rate from N199/US$ about one month ago to N292/US$ by the close of transaction last Friday.
Inflation rate for this month has been projected to hit 17 per cent but may overshoot that target with increasing scarcity of naira.
The National Bureau of Statistics (NBS), which released its June 2016 data on Monday morning, explained that this is the fifth consecutive month that consumer price index (CPI) which measures inflation has maintained its upward movement as it continue to record relatively strong increases.
It said imported commodities are responsible for the fast rate of inflation.
NBS said the June figure was 0.9 per cent points higher from rates recorded in May (15.6 per cent).
It blamed increases in the energy sector for the rise but explained that the increase was weighed upon by a slower increase in three divisions; recreation and culture, restaurant and hotels, and miscellaneous goods and services.
“Year on year, energy prices, imported items and related products continue to be persistent drivers of the Core sub-index. The Core index increased by 16.2 per cent in June, up by approximately 1.2 per cent points from rates recorded in May (15.1 per cent).
“During the month, the highest increases were seen in the Electricity, Liquid Fuel (kerosene), Furniture and Furnishings, Passenger Transport by Road, and Fuels and Lubricants for Personal Transport Equipment.”
Petroleum product importers and marketers are currently lobbying for government to remove the N145 cap imposed by Petroleum Products Pricing and Regulatory Agency (PPPRA).
While imported foods continue to increase at a faster pace, the Food sub index on the aggregate increased, albeit at a slower pace in June relative to May.
The index increased by 15.3 per cent (year on year) in June up by 0.4 per cent points from rates recorded in May. The index was weighted upon by a slower increase in the Vegetables and “Sugar, jam, honey, chocolate and confectionery” groups.
NBS said month-on-month, the Headline index has moved in a sideways fashion since February, the first month of a pronounced increase in rates this year. Specifically, in June, the index increased by 1.7 per cent, lower by roughly 100 basis points from rates recorded in May.
The report noted that the Headline Index is made up of the Core Index and Farm Produce items. As. Processed Foods are included in both the Core and Food sub-indices, this implies that these sub-indices are not mutually-exclusive.
Year on year, both the Urban and Rural indices increased albeit at a faster pace in June. The Urban index rose by roughly 100 basis points from 17.1 per cent in May to 18.1 per cent in June, while the Rural Index increased by 0.7 per cent points from 14.3 per cent in May to 15.1 per cent in June.