Nigeria’s inflation deviating from global trend
Nigeria’s inflation shows signs of sharp divergence from the global trend, especially in the West, recent data by the National Bureau of Statistics (NBS) have suggested.
Whereas the inflation rate is fast decelerating, in America especially, Nigeria’s consumer price index (CPI) which measures changes in prices, continues to rise.
Last month, for instance, headline inflation surpassed 22 per cent – the highest in decades. The month-on-month (MoM), a metric that measures the current intensity of inflation, remained uptick.
At 1.86 per cent, the MoM inflation marked its second fastest month in recent years, coming behind January’s 1.87 per cent. The high momentum of MoM change in general prices suggests that there could still be much upside for inflation worry.
Nigeria is currently in the planting season, during which, price crisis concern is expected to increase. Accounting for about 50 per cent of the consumption basket, the food segment, in the past few years, is the major driver of the country’s inflation.
Last month, food inflation stood at 24.45 per cent – clearly 4.6 per cent off core inflation. In the past, food inflation reading has exceeded core inflation by as much as 1000 basis points (bps), showing the heavy weight of food price volatility on the country’s headline inflation.
The last time food was lower than core CPI was in 2016 when the difference was between zero and -1 per cent. Since then, the variance has moved between two and 10 per cent, leaving struggling Nigerians spending more of their incomes on essential commodities.
In the coming months leading to harvest season, food prices are expected to remain uptick, which would feed on CPI.
Whereas inflationary pressure remains strong, Americ inflation saw its slowest rise in two years last month. The composite inflation was 4.98 per cent.
On MoM, it also recorded the steepest fall in recent times. The rate had slowed for the ninth consecutive time, raising hope inflation could slow to a two per cent target before year-end.
Official figures from the Britain’s CPI are due tomorrow. The inflation is expected to trim down below double-digit, from 10.4 per cent in February in what could be the beginning of easing in the cost of living crisis. Inflation has raged for over a year, setting a multi-decade high.
In Africa, inflation is also trending downward. For instance, Ghana’s inflation rate eased for the third month in March to 45 per cent, down from 52.8 per cent in the previous month. The crisis-ridden West African country’s inflation had reached a two-decade high of 54.1 per cent in December.
Global inflation spiked to 8.75 per cent but is expected to slow to 6.5 per cent this year, and further down to 4.1 per cent in 2024.
Against the trend, Nigeria’s inflationary pressure continues to uptrend, consolidating above 20 per cent in the past eight years. Authorities had linked runaway inflation with the crisis in Europe and the price crisis across the globe.