Inflation increases to 9.2%, Fuel Crisis takes toll on Food Prices......

Nigeria’s inflation advanced 0.2 percentage points to 9.2 percent in June, the highest level in over 24 months, as irregularity in fuel supply across the country continued to weigh on local consumer prices, according to the National Bureau of Statistics (NBS).

The NBS in a new report said fuel sold at N112.13 per litre on the average across the country in June, much higher than the N87 official price.

The Nigerian government last year cut fuel pump price to N87 per litre to reflect reduced landing costs of petroleum products, but figures from the NBS show that none of the 36 states, including the Federal Capital Territory sells the product at that rate.

 

In June, average pump price of fuel was costliest in Bayelsa at N155 per litre, followed by Niger at N138.33 and then Kogi at N128.33. The product sold the cheapest in Zamfara at N93, followed by Edo at N94.45. In Lagos, the nation’s commercial centre, fuel sold N102.63 per litre last month.

The NBS said on Tuesday that both food and core inflation rose at higher levels of 10 percent and 8.4 percent, the highest level witnessed in several months on higher transportation costs.

“Irregularity of the supply of Premium Motor Spirit (PMS) continues to impact food prices,” the federal statistics office said in its consumer price index report, noting “supply side challenges continue to have an adverse impact on food prices.”

The Food Sub-index rose by 10 percent (year-on-year) in June, up by 0.2 percentage points from 9.8 percent in May.

In addition to limited PMS supply, the late rains and implicitly late harvest have failed to weigh on food prices. Ironically, vegetables in particular become less available as precipitation begins, which increases the upward pressure on the Food sub-index, the NBS also noted.

The highest price increases were recorded in the vegetables, fish, bread and cereals, and potatoes, yam and other tubers.

On a year-on-year basis, all groups, which contribute to the Food sub-index, increased at a faster pace during the reporting period with the exception of oils and fats; totatoes, yams and Tubers groups, which increased albeit at a slower pace.

The CBN will meet next week to decide rates. Headline inflation, which is gradually hitting double digits after staying within the apex bank’s 6.0 percent – 9.0 per cent band, is expected to inform decisions at that Monetary Policy Committee meeting.

Core inflation has also risen consistently for the sixth consecutive month. CBN’s tight foreign exchange rules to shore up foreign reserves have helped weaken Nigeria’s naira, currently trading between N197-N240/$ at the interbank and parallel markets, respectively.