NIGERIA’s headline inflation rose to 26.72 per cent in September 2023 from 25.80 per cent in August, despite the palliatives provided by the Federal Government to cushion the effects of economic hardship on the citizens.
The National Bureau of Statistics (NBS) disclosed the figure in its latest report on ‘Consumer Price Index (CPI) and Inflation Report September’ released on Monday, October 16.
The September headline inflation is the second-highest rate recorded since the country reported 28.2 per cent in July 2005, checks by The ICIR showed.
The September inflation rate represents a 0.92 per cent increase compared to the 25.80 per cent reported in August.
Compared to the 20.77 per cent rate the statistical office reported in September 2022, inflationary pressure increased by 5.94 per cent.
The upward movement reflects the food inflation rate, which rose by 30.64 per cent in the review month compared to 23.34 per cent in September 2022.
The rise in food inflation was caused by increased prices of oil and fat, bread and cereals, potatoes, yam, tubers, fish, fruit, meat and others, NBS stated.
A critical economic indicator, CPI, measures the average change over time in the prices of goods and services consumed by people for day-to-day living.
Surging inflation defies FG’s palliative
Inflation has continued to surge in record times despite the palliatives to cushion the economic hardship of the masses, worsened by fuel subsidy removal and exchange rate unification by the new administration of President Bola Tinubu.
The palliatives include the conditional cash transfer of N25,000 to households, N35,000 wage increment for workers, N75 billion to strengthen the manufacturing sector, and N125 billion to empower the micro, small and medium enterprises.
There is also N5 billion approved by the government for each state and the federal capital territory (FCT) to address the lingering hardship of the masses, among other palliatives.
However, the continued rise in inflation directs the argument that the various palliatives have yet to impact households, businesses and the broader economy.
Also, the September inflation rate mirrors the slowdown in business activity due to rising input costs and other skyrocketing economic goods consumers paid for.
Businesses to go under
Some economists who spoke to The ICIR expressed concerns over the impact of the rise on businesses and the cost of money.
“Many businesses will go under as a result of this development. Lending would shrink, and businesses will pay higher costs to access facilities from banks. Manufacturers would also face more difficulties in accessing funds for the raw material inputs for production because of the higher cost of funds,” a development economist, Celestine Okeke, said.
Another development economist, Kalu Aja, said the major driver of the rising inflation is food inflation and high insecurity in the food belt states.
“We need to get down food inflation seriously and address insecurity in the food belt states across the country. This would help inflation to go down. The CBN rates are not enough for now; the real cause must be addressed.
In reacting to the development, the Chief Executive Officer of the Financial Derivatives, Bismarck Rewane, said the government needed to address core inflation triggers, which comprise logistics costs and the high cost of diesel in transporting goods and services.
“We’ve reached the level of intensifying concession of the roads and even the airports to lessen logistics costs of transporting goods and services. The food inflation, which is the main trigger, is high and largely caused by logistics and high energy costs,” Rewane said.
Intense cost pressures business activity
According to the Stanbic IBTC Bank in its September Purchasing Managers’ Index (PMI), businesses operating in the Nigerian private sector have remained under pressure in September.
Although the PMI posted at 51.1 points in September, up from 50.2 in August, Stanbic IBTC said it was still only just above the 50.0 ‘no-change mark,’ which is the point business activity is said to have contracted.
Commenting on business activity in September, the head of Equity Research West Africa at Stanbic IBTC, Muyiwa Oni, said, “Nigerian private sector business activity expanded slightly in September, a reversal from the contraction in August, reflecting a slight improvement business activity but still showing price pressure strain on businesses.
“The headline PMI increased to 51.1 in September, from 50.2 in August, which was the lowest point over the past five months.”
Before the September print, the PMI had declined consecutively over the past three months as prices remained elevated, with input and purchase prices remaining at period highs.
“Input prices increased materially across the major sectors covered, with inflationary pressures most pronounced in wholesale and retail and manufacturing,” Oni added.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.
Kehinde Ogunyale tells stories by using data to hold power into account. You can send him a mail at jameskennyogunyale@gmail or Twitter: Prof_KennyJames | LinkedIn: Kehinde Ogunyale