Nigeria’s inflation rate grew further to 12.56% in June, with prices of basic food products increasing.
Inflation in Nigeria has been on the rise since August 2019, when the country closed its land borders with its neighbors to avoid smuggling.
Later, it intensified with the influence of the novel coronavirus on the global economy.
The new Consumer Price Index (CPI) study by the National Bureau of Statistics (NBS) on Friday showed that the inflation rate for the month rose by around 0.16% from 12.40% in May.
The closing of the border affected the supply of rice, vegetable oil, frozen food and other staples, resulting in an rise in consumer prices.
In the latest report for June, the composite food index rose by 15.18 per cent in June 2020 compared with 15.04 per cent in May 2020.
This rise in the food index was caused by an increase in the prices of Bread and Cereals, Potatoes, Yam and other tubers, Fruits, Oils and Fats, Meat, Fish and Vegetables.
Core inflation, excluding prices of volatile agricultural products, also stood at 10.13 per cent in June 2020, up by 0.01 per cent compared to 10.12 per cent in May 2020.
“The highest increases were recorded in prices of Medical services, Hospital services, Passenger transport by road, Pharmaceutical products, Motor cars, Paramedical Services, Maintenance and repair of personal transport equipment, Bicycles, Motorcycles, Vehicle spare parts, and Other services in respect of personal transport equipment.”
The inflation rate of all things was the highest in Bauchi, Sokoto, and Ebonyi in June 2020 compared to June 2019, while Cross River, Lagos, and Kwara posted the slowest rise in the year-on-year headline inflation.
Annual food inflation levels have been highest in Sokoto, Plateau and Abuja, while Lagos Ogun and Bauchi have reported the slowest rise.
“On month on month basis, however, June 2020 food inflation was highest in Kogi, Benue, and Zamfara, while Ondo, Anambraand Lagos recorded the slowest rise.”
According to the economic analyst Basil Enwegbara, inflation is projected to rise with the various intervention programs of the Central Bank of Nigeria.
He also said that rising is not inherently an indicator of a poor economy,
“That an economy has high inflation does not mean the economy is bad nor does it mean an economy is doing great (if) it has low inflation.”
He clarified that high inflation can be expected if the country’s productivity is small, if there is a high level of unemployment, if there is a high import dependency, and if a growing economy is investing.
“When investing, you print more money, which is what the CBN is doing through its intervention fund, because there will be more naira in circulation.
“Nigeria is currently undergoing economic restructure. What the CBN is doing now should have been done before now. It is what the United States did in the 1930s when it employed Marriner Eccles.”
Mr. Eccles was the chairman of the US Fed, which revolutionized central banking by providing an outlet for small companies to flourish and create employment.
“He pumped an unbelievable amount of new money into America’s economy by printing it. Even though it caused an unprecedented high level of inflation, it grew the economy at a historic level,” Mr Enwegbara said.
