Food Blockade, Devaluation, Others to Push Inflation to 16.98%—Analysts
By Dipo Olowookere
Next week, the National Bureau of Statistics (NBS) is expected to release the consumer price index (CPI) in Nigeria for the month of February 2021.
The CPI measures the headline inflation and it is calculated by dividing the cost of market basket in the current period with the cost of market basket in the base period and the result multiplied by 100 to get the percentage change.
In the month of January 2021, the stats office said the inflation rate in Nigeria increased year-on-year by 16.47 per cent, 0.71 per cent higher than the 15.75 per cent recorded in December 2020.
As Nigerians await the next figures next Tuesday, analysts at Meristem Research have projected that inflation would jump to 16.98 per cent.
Explaining how they arrived at this, the analysts said the food crisis last month from the ethnic crisis in the Shasha area of Oyo State was one of the reasons.
Last month, some people of Yoruba extraction attacked Hausa traders at a market in the community and this triggered the blockade of food items from the northern part of the country, where most of the foods are grown, to the south.
It took the intervention of some eminent Nigerians to resolve the crisis as the farmers and cattle rearers said they must be paid N4.7 billion as compensation before they could transport food items to the south.
Within the period the Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN) blocked food to the southern part of the country, prices of food items increased at the market because of disruption in the supply chain.
According to the analysts, this and other factors will push the inflation rate higher.
“We note that while post-harvest supplies of key food items like cereals, yam, and other tubers were expected to moderate demand pressures, heightened supply chain bottlenecks and insecurity issues in the food-producing regions posed significant threats to the food supply.
“In particular, we point to the Shasha crisis which occurred in Oyo state, as well as the strike action by the Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN) around mid-February, which triggered a diversion of food supply away from the South to neighbouring countries.
“On the other hand, we attribute the rising prices of non-food items to higher transport (exacerbated by artificial scarcity which pushed pump prices of petrol slightly higher) and healthcare services costs.
“In addition to these, the FX devaluation in the I&E window to N410/$1 (vs prev. N400/$1) in February and a corresponding movement in the parallel market rate to N475/$1 also played its part.
“In sum, we expect consumer prices to rise by 16.98 per cent year-on-year in February,” analysts at Meristem Research said in their report seen by Business Post.
