Nov 16 (Lagos) - In October, Nigeria's year-on-year inflation rose to 27.33%, up from 26.72% in September 2023, contributing an additional 0.61 percentage points.
Food inflation increased to 31.52% from 30.64% in September, and core inflation, excluding food and energy items, rose to 22.58% in October, up from 21.84% in September, as reported by the National Bureau of Statistics (NBS).
On a monthly basis, the headline index grew by 1.73% in October (vs 2.10% in September).
The core index grew at a slower pace at 1.39% m/m in October vs. 2.22% m/m in September.
Similarly, the food sub-index grew at 1.91% m/m compared to 2.45% m/m in September.
The urban inflation rate increased to 29.29% y/y (vs 28.68% y/y in September 2023).
The rural inflation rate was rose at 25.58% y/y (vs 24.94% y/y in September 2023).
COMMENTRY
These numbers are not surprising to easykobo analyst because its been long time coming. CBN allowed this inflation problem to snowball into a monster it is today. Easykobo analyst actually things that real inflation is much higher especially in food items because if you go to market some of the items there are up more than 100% in recent months. So the way inflation in calculated officially may not be something that people on the ground agree with.
Some people are talking about an egg going for N 140-200 or bread at 1000-1300. Recently heard someone say that a bag of rice increased by 10% between October & November. Of course these things average out and we arrive at the official inflation number but that number may not reflect the true picture in the markets at the moment.
Coming back to CBN and their creation of this inflation monster, we remember when the ex-CBN Governor Lamido Sanusi made it his mission to bring inflation under 10%, that was about 12 years ago. Unfortunately for Nigeria economy, what followed his tenure at the CBN was something that can only be called a tragedy.
Now the CBN is trying to come out of their self created mess, a situation where the key benchmark lending rate is still almost 900 basis points below the inflation number. They need to raise to the rate but can they really keep on increasing the rate without affecting the business environment.
Companies such as
NESTLE ,
FLOURMILL ,
WAPCO ,
DANGSUGAR ,
BUAFOODS reported their quarterly reports that show huge increases in finance costs which lead to losses. We feel that the short term rate will have to be increased to control inflation but other measures will be required because we are likely to get close to 20% when the Monetary Policy Committee of the CBN meets next week to make their decision.
CBN delayed the interest rate hikes by a few years and now the inflation monster has escaped from the prison that SLS had created. They will have to catch it and bring it back under their control.
reporting for easykobo.com on Thursday, Nov 16 2023 from Lagos, Nigeria
