Experts ask govt to boost agric as inflation hits 21-month high

Inflation rises from 11.98% in Dec to 12.13% in Jan

The National Bureau of Statistics on Tuesday released the Consumer Price Index which measures inflation, with the index rising from 11.98 per cent in December 2019 to 12.13 per cent in January.

The 12.13 per cent inflation rate represents an increase of 0.15 percentage point over the index recorded in December.

An analysis of the NBS report reveals that the inflation rate of 12.13 per cent is the highest recorded by the economy in the last 21 months.

The last time Nigeria’s inflation rate was higher than 12 per cent was in April 2018 when the CPI rose to 12.48 per cent.

The report reads in part, “Consumer price index, which measures inflation increased by 12.13 per cent (year-on-year) in January 2020.

“This is 0.15 per cent points higher than the rate recorded in December 2019 (11.98) per cent.”

On month-on-month basis, the index increased by 0.87 per cent in January 2020.

This is 0.02 per cent rate higher than the 0.85 per cent recorded in December 2019.

The NBS report put the urban inflation rate at 12.78 per cent year-on-year in January. This is an increase from the 12.62 per cent recorded in December 2019.

For the rural index, it said this increased by 11.54 per cent in January from the 11.41 per cent recorded in December 2019.

On a month-on-month basis, the report said the urban index rose by 0.92 per cent in January, up by 0.02 per cent from 0.90 per cent recorded in December 2019, while the rural index also rose by 0.83 per cent in January, up by 0.01 per cent from the 0.82 per cent recorded in December 2019.

In terms of states that recorded the highest inflation-year-on-year basis, the report said Sokoto (15.20 per cent), Kebbi (14.37 per cent) and Niger (14.23 per cent) had the highest indices.

On the other hand, Delta with 9.95 per cent, Benue (9.61 per cent) and Kwara (9.49 per cent) recorded the slowest rise in inflation year-on-year.

On month-on-month basis however, food inflation was highest in Ondo (2.95 per cent), Anambra (2.61 per cent) and Abuja (2.57 per cent), while Benue, Kogi and River recorded general decrease in the general price level of food.

A former Deputy Governor of the Central Bank of Nigeria, Dr Obadiah Mailafia, said the spike in inflation was caused by a lot of factors such as the border closure, effect of finance bill anticipation as well as insecurity which had affected many farmers.

He said, “The root causes of inflation are several. First of all, the insecurity in the country has affected agrarian production, especially the food basket of the nation which is the Middle Belt.

“Last year, a lot of farmers were reluctant to go to the farms despite all the propaganda. In fact, production has been affected and so it leads to scarcity.

“Secondly, the closure of the border has created some temporary shock and scarcity. Thirdly, the Value Added Tax hike. Even though it took effect only recently, the expectations element of it – because people know it’s coming so they began to hike their prices in anticipation.”

He said support should be given to farmers while efforts should be made to reduce the rate at which money was being pumped into the economy by the Central Bank of Nigeria in its intervention programmes.

Also, a former Director-General, Abuja Chamber of Commerce and Industry, Mr Chijioke Ekechukwu, said the border closure, as well as insecurity, was responsible for the price increase.

He said, “It is obvious the inflation is responding to price rise due to closure of the land borders, effect of Finance Act anticipation and insecurity in the land.”

On what government should do to bring down the rate of inflation, he said there was a need for more support to farmers.

He said, “Government should continue to support the farmers in their various programmes so as to force prices down using competition, infrastructure facilities of roads, rail and power.

“Insecurity in Nigeria must be fought head-on. Forces of demand and supply will ultimately force the prices down,” he added.

The Chief Executive Officer, Nigerian Economic Summit Group, Mr ’Laoye Jaiyeola, described the increase in inflation rate as bad for the economy, adding that the government should address the issues that had brought about rising costs of goods and services.

He said, “We all know that rise in inflation rate is bad. People believe that the border closure is one of the reasons for it.

“Another issue is the challenges we are having around the ports about logistics; all this adds to costs. If you are meant to clear goods and you don’t clear it on time, you will pay more demurrage.”

He said inflation rate would continue to rise if nothing was done to curb it.

The Director-General, Chartered Insurance Institute of Nigeria, Mr Richard Borokini, said the rising cost would reduce the purchasing power of Nigerians.

With rising inflation, he said, more money would be used to purchase goods at higher prices.

“It is coming from the fact that the cost of doing business in Nigeria is rising. With the ban of okada, transportation cost has increased in Lagos, purchasing power has reduced as people now spend more money to transport themselves while going to work, these are some of the implications of inflation,” he said.

The Chairman, Nigerian Insurers Association, Mr Tope Smart, said, “Cost of goods and services will go up. And in the insurance sector, this will also affect the value of goods and services presented to insurance companies especially, when there is a loss and they need to get adequate compensation.”

He said the government should boost infrastructure and ensure that the economy was vibrant as this would cushion the effect and curb further inflation growth in the economy.