Possible effects of the ongoing gasoline crisis on consumer prices may have caused headline inflation to reach 21.82 percent, the highest level in about 20 years.
Inflation is now 6.22 percentage points greater than it was a year ago (15.6%), when it was 15.6.
Many saw the tiny decrease in the inflation rate in December—from 21.47 to 21.34 percent—as a hint that it may have peaked. However, The Guardian stated that there was a serious threat from electoral expenditure.
The National Bureau of Statistics (NBS) yesterday announced the January Consumer Price Index (CPI), which included a composite food index that increased by 24.32 percent year over year (y/y), the highest level in decades.
Core inflation, which is the portion of inflation that excludes volatile goods like food and energy, was 19.16%. The figure exceeds the December index by 0.66 percentage points.
The month-to-month (m/m) change, which measures how strong the inflationary pressure is currently, was 1.87 percent, which is also a record high. Despite the aggressive interest rate increase to slow the expansion, the monthly change indicates increasing inflationary pressure.
Inflation in urban areas was 22.55 percent, compared to 21.13 percent in rural areas. The stark contrast between the two categories and the high m/m change in the former (1.95%) support the critical role played by transportation, particularly of food products, in the alarming price growth.
Economists claimed that the government is not making any conscious efforts to combat the threat as the inflation rate continues to go upward.
Given that there is no intentional government policy to limit it, Professor Godwin Oyedokun, a council member of the Chartered Institute of Taxation of Nigeria (CITN), said he never believed that the inflation rate would decrease.
He claimed that factors other than the money supply are to blame for inflation, blaming import dependency for a large portion of it.
“In December, when it came down, I said it cannot last because the policy direction of government is not addressing fundamental issue, which is increasing local production. Until we do that, inflation rate will continue to rise,” he said.
He added that certain government officials might be using systemic manipulation to their advantage.
He stated: “Now that the election is around the corner, how many times have you heard about kidnapping or insurgency? That shows that what is happening in this country is a case of ‘the more you look, the less you see’. They know the solutions but they are not willing to implement them.”
The professor claimed that because the current administration is incapable of making difficult choices, there is little it can do to combat inflation.
In response, Prof. Benjamin Osisoma, President of the Association of National Accountants of Nigeria (ANAN), stated that the inflation mix is a complicated scenario.
“One expected it will exact a downward pressure on inflation and the consequences would be reduced prices, we are also expecting that the exchange rate to the dollar will come down, after all the naira that chases the dollar is very little in the hands of people.”
“For these things to come side by side with increased prices and high exchange rates, it reminds me of a phenomenon that was introduced in 1970 in our economic lexicon called stagflation.”
“Ours is a complex situation. But one thing you should know is that despite all the pressures coming from the government through the CBN, our economy is still import dependent.”
He pointed out that because the majority of commercial activities are conducted in dollars, inflation is increasing even as the value of the naira declines.
“The fundamental responsibility of the government is to move Nigeria from consumption to production. We need to produce more, we need to produce the things we consume,” he noted.
Eze Onyekpere, the Lead Director of the Centre for Social Justice (CSJ), noted that monetary policy is not sufficient to address Nigeria’s inflation issue.
