Experts See Hunger As Inflation Rate Hits 13.72% | Independent Newspapers Limited
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Experts See Hunger As Inflation Rate Hits 13.72%

Posted: May 17, 2016 at 6:51 am   /   by   /   comments (0)


Bamidele Ogunwusi



The economic downturn in the country appears to be hitting several sectors harder than envisaged as the April Consumer Price Index (CPI) which measures inflation has recorded a significant rise year-on-year, hitting record 13.72 percent in six years.

The developments leading to the inflation spike, according to experts who spoke to Independent on Monday, will further spread hunger among Nigerians who are currently under severe pressure due to hike in the price of petrol from N86.50 to N145.00 per litre.

In a statement on Monday by the National Bureau of Statistics (NBS), the numbers show that the headline, core, and food inflation rates stood at 13.7 percent, 13.4 percent and 13.2 percent up from 12.8 percent, 12.2 percent and 12.5 percent, respectively.

According to the NBS, the headline index increased by 13.7 percent (year-on-year), roughly 0.9 percentage points higher from rates recorded in March (12.8 percent). The higher rate of increase relative to March was reflected in faster increases across all divisions which contribute to the index with the exception of the restaurants and hotels division which increased, albeit at a slower pace, for the third consecutive month.

Economists and financial experts, however, gave different opinions on the new rate. Some believe it is a pointer to the fact that Nigerians should brace up for a hard time, while others believe that there are positive signals in the new report to a better country.

Ayo Teriba, an economist and CEO, Economic Associates, said: “The information is in the month-on-month measure. It shows that inflation has moderated in March and moderated further in April, following the spike in February, meaning that the impact of the cost shock on inflation will die out by itself, and no policy response is called for”.

He, however, added that the year-on-year measure creates a contrary but misleading impression.

“It creates the wrong impression of worsening inflation because of a low-base effect resulting from comparing the value of the index today to its value one year ago when the lull in economic activity in the election period meant that the value of the index and inflation rate fell to its lowest in the last decade or so”.

Oladapo Albert, a lawyer, who specialises in business law, said the new rate is a pointer to the fact that things are certainly not been done the right way in the country.

“If you look at the inflation rate in the last one year, you will notice a gradual increase month-on-month and the implication of this on the people is that the Nigerian masses will continue to wallow in abject poverty.

“This is simply a gradual descent to poverty. The average Nigerian who has been battling to cope with the pressure of inflation will soon surrender to the suffering associated with this. I hope Nigerians will not begin to show their anger on government soon.

“Let me say this that the CBN in its next monetary policy meeting will respond to this by increasing interest rate. I told you last time the MPC met that they will increase the interest rate and you saw what happened. The purchasing power of Nigerians is dwindling and it seems this government has nothing to do to ameliorate it.

“The way out of this is to devalue the naira and let us start from the basics all over again”, he added.

Matthew Ogagavworia, a chartered accountant and stockbroker, said “the average Nigerian lifestyle has been reduced by the increase in rate of inflation month-on-month because interest level remain the same and as fixed income earners who are unable to pass on the increase in cost of living to a third party, this makes things difficult for the average Nigerian”.

Ogagavworia added that the average Nigeria is worst off and has been pauperised.

“With the current fuel price increase, it will go higher in May and as a result an average income earner will become an endangered species in the face of mounting increases in the cost of his living in Nigeria”.

In March, the lingering fuel scarcity, which had had debilitating effect on economic activities, was seen to have further pressured consumer prices in April, with analysts projecting a steep rise in inflation rate for the month.

Experts put year-on-year inflation rate for April tentatively at 13.2%, a 0.4% higher than that of March (12.8%).

Muda Yusuf, Director General, Lagos Chamber of Commerce and Industry (LCCI), had said in April it was going to be a bad news for business operators in the country as they already had many issues affecting their operations.

He said for example they are already faced with the issues of power failure, lack of foreign exchange to procure raw materials, fuel shortage, high interest rate, adding that many businesses may die as a result of that.

“It is going to be the last straw for many businesses in the economy as they are already faced with many challenges from monetary policy”, he said, adding that Central Bank of Nigeria (CBN) should relax the monetary policy to make forex available to the industry operators.