Nigeria's consumer price index has shown a decrease in inflation rate from 17.38 per cent in July to 17.01 per cent in August of 2021 on a year-on-year basis, according to a monthly report by the National Bureau of Statistics (NBS).
That is 0.37 per cent point lower than the rate recorded in July 2021 (17.38) per cent, figures released yesterday showed.
Even though rates had declined since April 2021, on the spot survey of prices of commodities across Nigerian markets indicates that prices continue to skyrocket.
Analysts believe that inflation remains a controversial issue in Nigeria, with many saying the figures of the government-owned statistics bureau do not reflect actual prices of consumer products in the country.
But the latest NBS report said increases were recorded in all COICOP divisions that yielded the Headline index.
On a month-on-month basis, the Headline index increased by 1.02 per cent in August 2021, this is 0.09 per cent higher than the rate recorded in July 2021, 0.93 per cent.
The percentage change in the average composite CPI for the twelve months period ending August 2021 over the average of the price index for the previous twelve months period was 16.60 per cent, showing 0.30 per cent point from 16.30 per cent recorded in July 2021.
The urban inflation rate increased by 17.59 per cent (year-on-year) in August 2021 from 18.01 per cent recorded in July 2021 while the rural inflation rate increased by 16.43 per cent in August 2021 from 16.75 per cent in July 2021.
Many analysts warn that government must intensify efforts at tackling insecurity that is seriously threatening food security in Nigeria.
On a month-on-month basis, the urban index rose by 1.06 per cent in August 2021, up by 0.08 the rate recorded in July 2021 (0.98), while the rural index also rose by 0.99 per cent in August 2021, up by 0.12 the rate that was recorded in July 2021 (0.87) per cent.
The corresponding twelve-month year-on-year average percentage change for the urban index is 17.19 per cent in August 2021. This is higher than 16.89 per cent reported in July 2021, while the corresponding rural inflation rate in August 2021 is 16.03 per cent compared to 15.73 per cent recorded in July 2021.
Meanwhile, Dr. Muda Yusuf, an economist and former director-general of Lagos Chamber of Commerce and Industry (LCCI), said that "The marginal decline in the August headline inflation by 0.37 per cent to 17.01 percent (year on year) is noteworthy.
"Equally noteworthy is the consistency of the composite price index over the past four months."
Yusuf noted, "but these declines remain very marginal and raise the question of materiality. Headline inflation at over 17 per cent is still quite high and remains a cause for concern. The major inflation drivers have not abated."
"These factors include transportation costs, logistics challenges, exchange rate depreciation, forex liquidity issues, hike in energy prices, climate change, insecurity in many farming communities and structural bottlenecks to production. These are basically supply-side issues. Any mitigation measures would have to be situated in the context of these factors."
He added: "The heightened fiscal deficit financing by the CBN could be another potent inflation driver. The financing of fiscal deficit has been elevated to disturbing levels with huge implications for money supply and consequent effect on inflation. CBN financing of deficit is high powered money and therefore very inflationary.
"Mounting inflationary pressures weaken the purchasing power of citizens as real incomes are eroded, it aggravates pressure on production costs, negatively impacts profitability, erodes shareholders' value and undermines investor confidence."
He explained that "in many cases, increases in production costs cannot be transferred to consumers. The implication is that producers are also taking a hit. This is more pronounced where the demand for the product is elastic. These are products that consumers can readily do without.
"Tackling inflation requires urgent government intervention to address the challenges bedevilling the supply side of the economy and the moderation of fiscal deficit monetisation."