By Elizabeth Adegbesan
The seasonal rise in prices of food items has further pressured the nation’s inflation rate in May 2019 to 11.4 percent, about 0.03 basis points above the previous month’s record. This would be the second consecutive uptick in the inflation rate this year, haven risen 0.12 basis points in April against March 2019.
The National Bureau of Statistics (NBS), yesterday, in its Consumer Price Index (CPI) report for May 2019, said the rise was across all classifications of the inflation index.
The Bureau stated: “The Consumer Price Index, (CPI) which measures inflation increased by 11.40 percent (YoY) in May 2019. This is 0.03 percent points higher than the rate recorded in April 2019 (11.37 percent). Increases were recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yielded the headline index.
“On Month-on-Month (MoM) basis, the headline index increased by 1.11 percent in May 2019. This is 0.17 percent rate higher than the rate recorded in April 2019 (0.94 percent).”
Further breakdown of the figures show that urban inflation rate increased by 11.76 percent (YoY) from 11.70 percent, while rural inflation rate increased by 11.07 percent from 11.08 percent in April 2019.
On a MoM basis, the urban index rose by 1.15 percent, up 0.15 points from 1.00 percent recorded in April 2019, while the rural index rose 1.07 percent in May 2019, up by 0.17 from the rate recorded in April 2019 (0.90 percent).
NBS said that the composite food index rose by 13.79 percent compared to 13.70 percent in April 2019.
The report stated: “This rise in the food index was caused by increases in prices of meat, oils and fats, bread and cereals, potatoes, yam and other tubers, fish, milk, cheese and egg, and vegetables.
“On MoM basis, the food sub-index increased by 1.41 percent in May 2019, up by 0.27 percent points from 1.14 percent recorded in April 2019.
Commenting on the development, Analysts at the FSDH Merchant Bank said: “The major driver of the increase in the inflation rate in May was the increase recorded in the Food Index. This is in line with the historical trend driven by the commencement of raining and planting season.
“The rising security challenges in recent weeks in Nigeria have added to the escalating food prices.
On the policy implication, the analysts at FSDH said; “We believe the Central Bank of Nigeria (CBN) may not increase the policy rates to curb the rising inflation rate; The CBN may however, raise the Treasury Bill rates at the secondary market (OMO) to mop up liquidity from the financial market until inflation rate begins to go down.
“FSDH Research believes the immediate priority of the federal government of Nigeria and the CBN is to achieve inclusive growth momentum in the economy through an expansion the Gross Domestic Product (GDP) and the CBN may trade off inflation for growth in the short-term.”
Analysts at Cowry Asset Management Limited stated: “We expect inflation rate to increase further as indicated by recent build up in monthly price increases, especially against the backdrop of ongoing planting season as well as anticipated increase in spending activity following the implementation of the new minimum wage bill”.