Nigeria’s inflation records new height, jumps to 22.41% in May
Nigeria’s inflation rate moved up to 22.41% in May, adding a 0.9% increase from the 22.22% rate it recorded in the previous month of April, according to the latest report from the National Bureau of Statistics.
The report, which was published on Thursday, also revealed a 4.70% increase in the headline inflation rate compared to the rate recorded in May 2022.
“In May 2023, the headline inflation rate increased to 22.41% relative to April 2023 headline inflation rate which was 22.22%.
“Looking at the movement, the May 2023 inflation rate showed an increase of 0.19% points when compared to April 2023 headline inflation rate.
“Similarly, on a year-on-year basis, the headline inflation rate was 4.70% points higher compared to the rate recorded in May 2022, which was (17.71%),” the NBS said.
According to the report, the above figures indicated that the headline inflation rate (year-on-year basis) increased in May 2023 when compared to the same month in the preceding year (May 2022).
In April, the report by the NBS noted that food inflation rose to 24.61%, buoyed by factors such as fuel scarcity, and the cash crunch – emanating from the chaotic implementation of the naira redesign policy.
The increase is below 22.7 percent growth predicted by econometric analysts from Financial Derivatives Company Limited.
The FDC analysts led by Bismarck Rewane, Managing Director and Chief Executive Officer, made the forecast in their monthly economic bulletin for June.
The economic expert noted that the Central Bank of Nigeria had over the past 12 months adopted orthodox and unorthodox measures to cool inflation in Nigeria, but to no avail.
He added that while the monetary policy rate has increased by a total of 700bps to a 20-year-high of 18.5%pa from 11.5%pa in April 2022, inflation has maintained its upward trend to 22.22 percent (April 2023) from 16.45 percent, when the CBN began its tightening cycle.
“Based on our econometric analysis, we are projecting another increase in the headline inflation rate to a fresh 17-year high of 22.7% when the NBS publishes the CPI report for the month of May. Aside from the sustained upward trajectory, the rate of increase in the level of inflation has become more rapid than in earlier months this year. The major drivers of inflation during the month of May remain money supply growth (up 18.87% y-o-y), supply shortages (planting season effect) and exchange rate pass-through (down 3.3% to N765/$),” the report stated.
On why they predicted 250bps hike inflation between May and June, the analysts noted that inflation data for May was not reflective of the effect of the 150 percent jump in the price of petrol resulting from the removal of the fuel subsidy.
However, Nigeria’s inflation rate is expected to rise further following the removal of fuel subsidy and the floatation of the naira by President Bola Tinubu.
The removal of fuel subsidies last month has seen an increase in transport fares across the nation, which has escalated rapidly – impacted the cost of goods and services.
Also, the introduction of the new forex regime, which has collapsed Nigeria’s multiple exchange rates into one unified rate under the Investor and Export window, is expected to rocket the cost of imported goods.
“With dollars now sold at market rates, imports like hair extensions will cost more,” Kalu Aja, a financial expert, noted.
According to him, “the economy will be repriced, and lots of costs that were “subsidized” will see its total prices come to the fore.”
Experts have advocated an upward review of minimum wage as a way of cushioning the effects of the recent policy changes. The idea, according to them, is to boost the spending power of workers through increased disposable income.
Already, the effects of past poor economic policies by the previous Muhammadu Buhari’s government have taken a toll on the meager income of Nigerians – compounding economic hardship in the country.
The cost of basic food items required for survival by an average Nigerian family rose by 17.5 percent to N48, 130 in January 2023 from N40, 980 in the same period of last year, according to a 2023 Minimum Wages report.
Aja, while urging the government to ensure that the poor are protected and can still survive, said to ameliorate the high cost of living resulting from the major policy changes, Nigeria needs to boost its export.
“Your job now is to look for an imported item that Nigerians like. The cost of that item is going up,” he said.
Provide enabling environment for private sector, EU urges Tinubu
Meanwhile, the European Union has urged President Bola Tinubu to help the private sector create an enabling environment to thrive.
The Head of the European Delegation to Nigeria and Economic Community of West African States, Samuela Isopi said this on Thursday while briefing journalists on the coming Afro-Euro runway in Abuja.
The runway which is slated for Friday, June 16 is organised by EU member states in collaboration with the Abuja Fashion Academy.
Isopi said the EU is ready to work with the administration to ensure the success of the private sector, especially in the area of fashion.
She noted the EU would be working with Nigerian institutions to build the fashion industry.
Isopi stated “I hope the new administration will help partner with the private sector to help create an environment where we can really help the sector in general.
“Textile is one of those because it really creates a lot of jobs. So this is our first objective.
“My role and that of our member states is to create the platform and then it is up to the Nigeria private sector and of course private companies from Europe.”
Speaking on the coming Afro-Euro runway, Isopi noted “The very first edition of a special event, the afro Euro runway fashion show will be held on June 16, 2023.
“When I arrived in Nigeria a few years ago, I said we should try and see how we can really facilitate dialogue between cultures using fashion.
“Together with our partners, we were able to put together what I consider to be an extraordinary initiative because it brings together so many talents.”
Speaking at the programme, a renowned fashion designer, Paolo Sisiano, hailed the seven finalists, urging them to take advantage of the opportunity given to them.
Sisiano said “I want to appreciate the EU for this because it is such one realistic opportunity for the seven designers that are going into this.
“It sort of propels the next five years of your life and you need to take advantage of it. Nigeria is aware of talents and there are so many things that we bring into fashion in terms of innovation.”
Seven finalists will compete on Friday and four winners will be selected.