The Consumer Price Index (CPI) report released recently by the National Bureau of Statistics (NBS) to the effect that the annual inflation in Nigeria quickened to a near six-year high of 13.7 per cent in April – the highest level since August 2010 – in part due to rising petrol and electricity prices, stoking expectations of another rate hike, is alarming and calls for immediate reversal of the unsavoury and disturbing trend.
According to the report, skyrocketing electricity rates, kerosene prices, petrol pump prices and prices of vehicle spare parts pushed inflation rate to 13.7 per cent in April from the 12.8 per cent recorded the previous month. The NBS described the latest leap in the nation’s inflation rate as “a relatively strong increase for the third consecutive month.”
The higher rate of increase relative to March was reflected in faster increases across all divisions which contribute to the index with the exception of the restaurants and hotels division which increased at a slower pace for the third consecutive month, the report stated.
Analysis of the report showed that electricity, kerosene, petrol, vehicle spare parts and other imported items continued to have ripple effects on the market with consumers paying more for the commodities compared to the previous month.
The Premium Motor Spirit (PMS) Price Watch Report also released by the NBS revealed that Nigerians bought fuel at an average price of N162.82 in April, up from N135.69 reported in March. The inflation report showed that food supplies are getting “tighter,” forcing the Food index to 13.2 per cent in April, up by 0.4 per cent points from rates recorded in March. The inflation was “driven by higher food prices of fish, bread, cereals, and vegetables.
Nigeria’s worst economic crisis in decades has been driven by a sharp drop in oil prices that has slashed government revenues since the country relies on crude sales for over 80 per cent of national income. Gross Domestic Product (GDP) growth was just 2.8 per cent last year, its lowest rate since 1999, and speculation of a devaluation of the naira currency is growing. March inflation was 12.8 per cent.
Inflation has also been fuelled by pressure on the naira, which last Monday slipped to its weakest level in months against the dollar in the non-deliverable forward market. Economic growth, which is estimated to have slowed to three per cent last year, the lowest since 1999, is set to remain subdued following the new policy on ‘flexible’ foreign exchange announced by the Central Bank of Nigeria (CBN) on Tuesday.
Governor of the CBN, Godwin Emefiele, said on Tuesday that the Monetary Policy Committee (MPC) has retained Monetary Policy Rate (MPR) at 12 per cent, Cash Reserve Ratio (CRR) at 22.5 per cent and Liquidity ratio at 30 per cent, while embracing a flexible foreign exchange market. Also, the CBN would retain a small window for funding small transactions details which would be made available by the apex bank. Emefiele said that the action is predicated on a less optimistic outlook for the economy, given that initial monetary injections from the budget may not immediately impact on the economy.
Blueprint acknowledges the fact that the continued leap in the nation’s inflation rate across all sectors was not unexpected given the volatility in domestic fuel and electricity prices in the period under review. But we are, however, appalled by the ripple effects of the inflation trend on the people if not checked. That the inflation trend has been exacerbated by the recent hike in the pump price of petrol to N145 per litre from N86.50k, raising apprehension of a probable 15 per cent inflation rate this month, makes the matter even more worrisome.
We, therefore, urge the federal government to reverse the skyrocketing inflation rate which is impacting negatively on the people with its domino effects on commodities, transportation and general utilities. An immediate step is for the federal government to implement to the letter, the provisions of the 2016 budget, which have far-reaching implications for the economy if not properly managed. The budget has good intentions but it has the potency of causing industrial unrest as it certainly will trigger off a general rise in the prices of goods and services in the economy during the year.
The 2016 spending plan of the federal government will require fiscal discipline by adhering to planned release of funds into the economy and a very close collaboration with the CBN to tame inflation. An upward review of wages, to enable workers to cope with the double digit inflation, is also inevitable.
