18 December 2012

Nigeria: High Food Prices Raise Inflation to 12 Percent

Persistent rise in the prices of staple foods caused the composite Consumer Price Index (CPI) which measures inflation to rise to 12.3 per cent year-on-year in November compared with the 11.7 per cent of the preceding month.

On a month-on-month basis, the composite CPI rose by 0.60 per cent compared with the preceding month's index.

The official CPI report released yesterday on the CPI by the National Bureau of Statistics attributed the relative increase in the headline index during the month under review to general higher prices of food and core indices. The headline inflation is made up of Core Index and Farm Produce Items.

The Composite Food Index, it was disclosed "increased year-on-year by 11.6 per cent to 139.8 points, indicating 0.5 percentage points higher than 11.1 per cent recorded in October compared to the 0.7 per cent month-on-month increase from October to November.

"The rise in the Food Index was as a result of higher food prices in various classes within the index led by bread and cereals due to higher rice prices. Also within this class, gari processing slowed resulting in higher garri prices. There were also increased prices in vegetables due to the dry season, higher potato, yams and other tubers, and higher fish prices.

"The higher food prices continue to reflect the impact of recent floods on the production of farm produce, the resulting difficulty of moving food products to markets across the country, coupled with other processing and seasonal costs. The average annual rate of rise of the index for the twelve-month period ending in November 2012 was 11.4 per cent when compared to the same period in 2011", the Bureau added.

It was also reported that the "All items less Farm Produce" index which excludes the prices of volatile agricultural products rose by 13.1 percent year-on-year. This was 0.7 percentage points higher than the 12.4 percent recorded in October.

The Bureau pointed out that unlike previous months, the core sub-index deviated from its trend, increasing to 13.1 per cent while food index continued to show lagged effects of the floods which impact was heavily felt in several farmlands in October as well as other demand and supply factors.

A further decomposition of the CPI on urban and rural basis showed that the urban inflation rate was recorded at 15.8 per cent year-on-year, an increase of 0.5 percentage points from the 15.3 per cent increase recorded in October, increased by 0.7 percentage points to 9.8 percent on a year-on-year basis from October.

Analysing the trend further, the agency reported that on a month-on-month basis, the 'Urban All' index increased by 0.6 percent from October, while the 'Rural All Items' index increased by 0.63 when compared with the previous month, adding that the percentage change in the average composite CPI for the 12-month period ending in November 2012 over the average of the CPI for the previous 12-month period was recorded at 12.1 percent, while the corresponding 12-month year-on-year average percentage change for the Urban and Rural indices was 14.2 per cent and 10.5 percent respectively.

"Increases in the Core index was as a result of increases in the Housing, Electricity, Gas and other Fuel division, in particular rental and imputed rent prices, increased liquid fuel prices (such as kerosene due to the prevailing supply - demand gaps), increased air transportation costs, and clothing prices.

"On month-on-month basis, the Core index increased by 0.4 percent in November, unchanged from October. The average 12 month annual rate of rise of the index was recorded at 13.6 per cent (year-on-year) for the twelve-month period ending November 2012" NBS reported.

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