Nigeria’s February headline inflation will likely jump to double digit, the largest increase in about three years, as higher energy costs, scarcity of petrol and the imported impact of tight Foreign Exchange FX conditions begin to weigh significantly on consumer prices, BusinessDay finds.
The National Bureau of Statistics (NBS) is expected to release the inflation numbers for February, early next week, but preliminary figures are already showing the huge impact of high energy costs, transportation, as well as imported items pushing headline inflation numbers to above 10 percent.
Sources close to the NBS suggest that the numbers that had been collated and are now being reviewed, indicate that the figure will likely hit a record 11 percent.
This should be the largest increase since January 2013 when the inflation of Africa’s largest economy was recorded at 9.3 percent, looking at previous monthly Consumer Price reports from the NBS.
“Just five days to the collection of full February data, the figure was already over 11 percent from 9.6 percent,” the NBS source told BusinessDay.
“Even if those five days come down, it is unlikely to push headline inflation to even 10 percent. Those five days cannot pull down the whole figure,” he added.
Nigeria’s inflation remained unchanged at 9.6 percent in January 2016, the same figure posted in December 2015 weighed upon by slower increases in other major divisions such as housing, water, electricity, gas and other fuels; and furnishings and household equipment maintenance.
The NBS said in that report that the increases in food prices as recorded by the food sub-index increased at the same pace in January as in December, increasing by 10.6 percent (year-on-year).
But after increasing at the same pace for the third consecutive month, the “All Items less Farm Produce” or Core sub-index edged marginally higher, increasing by 8.8 percent in January 2016 from 8.7 percent in December 2015,” the report added.
But since February 1, when the Nigerian Electricity Regulatory Commission (NERC) commenced implementation of the 45 percent electricity hike that it had announced earlier, consumer prices had risen, worsened by shortage of fuel supply and stiff FX supply.
“Normally I spend like N40,000 on my electricity for a month. But that time after about two weeks that money was exhausted and the light went off,” a top Abuja politician told BusinessDay yesterday.
Tight FX supply also worsened in February as the Nigerian naira weakened tremendously to about N400 to the dollar, leaving importers in the largely import dependent nation scrambling for dollars.
“…what is pushing the inflation numbers up? First of all is the electricity tariff that was increased by over 40 percent. Then the PMS too is still a tough issue, so the increased transportation cost caused by fuel scarcity has also brought in some knock-on effect on food prices,” the NBS source told BusinessDay.
“There is also the issue of imported inflation as a result of the exchange rate impact slowly hitting the system,” he added.
The NBS will also release Premium Motor Spirit Price watch, with which it captures petrol prices across the country, alongside the CPI report. Experts expect to see the impact of the lingering fuel shortages and queues show on consumer prices.
But in January, a litre of petrol sold averagely for as high as N109.59 across Africa’ largest economy and 8th global largest producer of oil, as oil marketers boycotted petrol importation on account of shortage of dollars.
Figures showed that on the average, no state, within that month, sold petrol anywhere close to the N86.5/litre official pump price. Rather, prices ranged averagely between N91.06 (the cheapest in Laogs) and as high as N132.4 in Ebonyi state.
In the Consumer Price Index report, the NBS confirmed that high petrol costs therefore had a knock-on impact on food prices.
Onyinye Nwachukwu
