For the second consecutive month, the rate at which prices of goods and services in Nigeria rise is high as inflation climbed slightly to 11.28 percent in September moving further away from the Central Bank of Nigeria (CBN) single digit inflation target.
Inflation figures released by the National Bureau of Statistics (NBS) yesterday showed that although, there was a slow growth in core inflation, food inflation rose at a faster pace. According to NBS, the consumer price index, (CPI) which measures inflation increased by 11.28 per cent year-on-year in September 2018, 0.05 per cent points higher than 11.23 per cent recorded in August 2018.The composite food index rose by 13.31percent in September 2018 compared to 13.16 percent in August 2018, occasioned by increases in prices of Potatoes, yams and other tubers, vegetables, fruits, meat, milk, cheese and egg, Bread and cereals, and Fish. On month-on-month basis, the food sub-index increased by 1.00 percent in September 2018, down by 0.42 percent points from 1.42 percent recorded in August.
Core inflation which is all items less farm produce, was 9.8 per cent year on year in September compared to 10.02 per cent in August. The highest increases were reported in the prices of fuels and lubricants, dental services, hospital services, vehicle spare parts, furniture and furnishing, tobacco, and carpets and other floor covering materials. On a month on month basis, the core index increased at a slower pace of 0.64 per cent, three basis points below the 0.78 per cent reported in August. Commenting on the rise in inflation, Group Chief Executive of Afrinvest West Africa Limited, Ike Chioke noted that the rising inflation is reflective of the security challenges of the country. The rising inflation, he noted is mainly from increasing food prices occasioned by clashes and security issues in the food belt of the country. On his part, Research Analyst at FXTM, Lukman Otunuga, noted that with consumer prices rising for the second consecutive month after 18 months of steady declines, concerns may heighten over inflation edging away from the Central Bank of Nigeria's six to nine per cent target. "Market expectations over an interest rate cut anytime soon are likely to diminish further following today's inflation report. The combination of rising inflation, uncertainty ahead of the 2019 elections, global trade tensions and U.S. rate hike expectations are all likely factors to force the CBN to remain status quo this quarter."
Chioke also projected that upcoming elections which has seen a lot of cash changing hands may hold the monetary policy committee from cutting rates soon.