Nigeria’s inflation year-on-year rose marginally to 8 percent in May as against 7.9 percent the previous month as consumer prices moved up slowly but steadily since February.
The National Bureau of Statistics (NBS) confirmed in its Consumer Price Index (CPI) report on Monday that since the headline index declined in January, prices continued to trend upwards, however, at a slow pace, increasing by 0.1 percentage points (year-on-year) monthly, between February and May.
The bureau said that the price increases seen in May were as a result of higher prices in groups that contribute to both the Food and Core sub-indices.
Food prices increased for the third consecutive month (year-on-year) in May, and were also the highest year-on-year increase observed so far in the year, the bureau noted.
Specifically, food prices edged higher to 9.7 percent, about 0.3 percentage points up from 9.4 percent in April. The increases were supported by higher prices in the bread and cereals, fish, dairy, fruits, and vegetable groups.
However, price increases in the food sub-index were weighed down by relatively slower increases in the meats, oils and fats, and, potatoes, and yams and other tuber classes, according to the NBS.
Prices measured by the core sub-index increased even faster in May from April, rising by 7.7 percent (year-on-year), some 0.2 percentage points higher from the rate recorded in April.
“This is the highest year-on-year rate recorded for the Core sub-index this year,” the statistics office said in the report.
Core inflation, which declined to 6.6 percent in January, increased to 7.2 percent in February, and rose further to 7.5 percent in April, 2014.
The items that contributed to the increase in the Core sub-index were furniture and furnishings, garments, rental prices, as well as liquid and solid fuels.
Helped its tight monetary stance, the CBN has been able to rein in inflation, keeping it within the 6-9 percent target in the last seven months.
But it signaled that it would keep a close watch at the core inflation which has continued to send conflicting signals since January.
At the last Monetary Policy Committee meeting in May, the CBN again kept key rates flat on the grounds that monetary policy measures in attaining price and exchange rate stability had been successful.
The new governor, Godwin Emefiele, however, said on assumption of office earlier in the month that the CBN would pursue a gradual reduction in interest rates to spur lending to the real sector.
But a huge concern for the CBN now is that of a high systemic banking system liquidity, and anticipated high election-related spending in the run-up to the 2015 general elections which are all capable of exerting inflationary pressures.
The apex bank is also worried that the high domestic liquidity could exert sustained pressure on both the exchange rate and consumer prices, as well as accentuate the already high demand for foreign exchange, further depleting the country’s external reserves which had dropped to about $37 billion as at last week.
