•As Inflation rate hits 12.26 % in March

By Babajide Komolafe

The rising trend of Nigeria’s annual inflation rate will intensify in April driven by continued increase in prices of food items due to the impact of the COVID-19 restrictions as well as the onset of the planting season.

This was the highlight of analysts’ projections in their comments on the Consumer Price Index Report for March released by the National Bureau of Statistics (NBS) yesterday, which showed that the nation’s annual (headline) inflation rate rose for the seventh consecutive months to 12.26 per cent in March, the highest in 23 months from 12.2 per cent in February.

The inflation rate has been on the rising trend, from 11 per cent in September last year, largely driven by the effect of border closure.

The NBS report stated: “The consumer price index (CPI), which measures inflation, increased by 12.26 per cent (year-on-year) in March 2020. This is 0.06 per cent points higher than the rate recorded in February 2020 (12.20) per cent.

“The lockdown in Abuja, Lagos and Ogun States and various major disruptions in normal economic activity in several States since then, started in April 2020 and accordingly would not have any major impact on March 2020 Inflation which this report focuses on.

“On month-on-month basis, the headline index increased by 0.84 percent in March 2020, 0.05 percent higher than the rate recorded in February 2020 (0.79 percent).

READ ALSO: Nigeria’s inflation rate rises to12.26 % in March, highest in 23 months

“On a month-on-month basis, the urban index rose by 0.88 percent in March 2020, up by 0.06 from 0.82 percent recorded in February 2020, while the rural index also rose by 0.80 percent in March 2020, up by 0.04 points from the rate recorded in February 2020  (0.76 percent).

“The composite food index rose by 14.98 percent in March 2020 compared to 14.90 percent in February 2020. This rise in the food index was caused by increases in prices of Bread and Cereals, Fish, Potatoes, Yam and other tubers, Oils and fats, Vegetables, and Fruits.

“The ‘’All items less farm produce’’ or core inflation, which excludes the prices of volatile agricultural produce, stood at 9.73 percent in March 2020, up by 0.3 percent when compared with 9.43 percent recorded in February 2020.”

Inflation to intensify

Commenting, analysts at Lagos based investment firms, Afrinvest Limited and United Capital Plc, projected that the inflation rate will rise faster this month due to impact of COVID-19 restrictions and onset of the planting season.

Analysts at Afrinvest said: “Going forward, we anticipate increased pressure on domestic consumer prices, mainly food. Our expectation is driven by the disruption to the agriculture value chain amid the lockdown as well as the lean season when there is usually reduced agriculture output.

“We believe there would be a faster-paced increase in inflation once the lockdown measures are relaxed and economic activity resumes. Until then, the pass-through of trade restrictions, exchange rate weakening and the recent VAT increase to consumer prices would be muted.”

Analysts at United Capital stated: “In the month of April, a number of factors are pointing towards a sharp increase in headline inflation rate. Of all factors, we expect the most significant pressure to come from increases in food prices, as two key states in terms of economic activities, Lagos, Ogun, and the FCT are on lockdown.

“Notably, the restriction of movement has caused a wave of panic buying, as consumers stock up on essentials, coupled with the fact that all land borders remain closed, with local supply barely meeting demand.”

Vanguard Nigeria News