High food cost nudges October inflation to 11.7%

The rising cost of food items pushed Nigeria’s inflation year-on-year, slightly to 11.7 percent in October, offsetting relative moderation in the headline index which was recorded at 11.3 percent in September. 

The National Bureau of Statistics reported on Monday, that while the “Core” index continued its declining trend over the last few months to 12.4 percent in October, from 13.1 percent in September, food index increased to 11.1 percent, from 10.2 percent, over the same period.

The moderation in consumer price rise, according to the Bureau, was mainly due to a decline in core index growth, which the Central Bank of Nigeria (CBN) has continued to watch closely, with its lending and exchange rate policies.

“Since its year-on-year peak of 15.2 percent in June of this year, the Core index continues to exhibit a declining trend, partially as a result of uncompromising monetary policy on the part of the CBN,” the data office stated in its latest Consumer Price Index (CPI) report.

The CBN has kept its benchmark lending rate on hold, at 12 percent, for the sixth consecutive time and retained the Cash Reserve Requirement (CRR) and Net Open Position (NOP) at 12 per cent and 1.0 per cent, respectively, to cut down pressure on the naira and curb inflation.

Economic experts think that this slight rise in inflation numbers may not be enough to make the CBN vote for further tightening, as it concludes its Monetary Policy Meeting today. They therefore suspect that the apex bank will not alter its current monetary stance, and may still adopt the current tightening stance, till the end of the year.

NBS figures indicate that the urban inflation rate, which stood at 15.3 percent year-on-year, was higher than the rural index recorded at 9.1 percent year-on-year increase.

It further noted that the Food Index increased year-on-year to 11.1 percent, 0.9 percentage points higher than 10.2 percent recorded in September, and increased by 1.0 percent on a month-on-month basis.

“The rise in the Food Index was mainly due to higher food prices in various classes, led by meat, fish, potatoes, yams and other tubers, fruits, bread and cereals, as well as other foods,” the data office stated.

It added that while the impact of security concerns on agricultural production has eased significantly, the higher food prices continue to reflect the impact of recent floods on the production of farm produce, resulting difficulty of moving food products to markets across the country, and with higher demand for food items, due to the just concluded Muslim festival.

But core inflation recorded as the “All items less Farm Produce” index, which excludes the prices of volatile agricultural products, rose by 12.4 percent year-on- year. This was 0.7 percentage points lower than the 13.1 percent recorded in September.

The NBS said the relative moderation in the core index (on a year-on-year basis) continues a trend exhibited for four consecutive quarters.