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The slow growth rate of the economy has further been fuelled by an uptick in headline inflation, which has hit 21-month high. According to the National Bureau of Statistics (NBS), the Consumer Price Index (CPI) increased to 12.13 per cent (year-on-year) in January compared to 11.98 per cent in the preceding month of December.
The 12.13 per cent inflation rate represents an increase of 0.15 percentage point over the index recorded in December 2019. This is the highest recorded by the economy since April 2018 when the CPI rose to 12.48 per cent.
The report also put the urban inflation rate at 12.78 per cent in January. This is an increase from the 12.62 per cent recorded in December 2019. For the rural index, the NBS data showed it increased by 11.54 per cent in January from the 11.41 per cent recorded last December.
Among the states that recorded the highest inflation year-on-year basis, Sokoto State came top with 15.20 per cent, followed by Kebbi and Niger states with 14.37 per cent and 14.23 per cent, respectively. Kwara State recorded the slowest rise in inflation for the month of January with 9.49 per cent. But on month-on-month basis, Ondo State recorded the highest food inflation rate at 2.95 per cent, Anambra 2.61 per cent, while Benue, Kogi and Rivers states recorded general decrease in price level of food.
Altogether, it is not hard to locate where the latest rise in inflation has come from. The perturbing trend may be associated with the recent border closure, especially against the importation of foodstuff. With the temporary reduction of the commodities that used to come to Nigeria through the neighbouring West African countries, it is most likely that cost-push inflation would be the outcome, as many industries in Nigeria depend on the imported commodities.
Whatever may have been the benefits of the border closure, especially that of checking smuggling of banned food items, the cost benefit analysis seems to suggest that time has come to review the policy to stem further inflationary pressure. That possibility is likely, as President Muhammadu Buhari has said that the government is awaiting the outcome of West African leaders committee set up recently on the matter. We hope government will look at the issues at stake and take the best decision.
But of more critical importance is the need for a comprehensive policy in agriculture. Undoubtedly, the present rise in food inflation should be of great concern to the government. Contrary to the President’s recent claim that the country is almost self-sufficient in food production, the reality is that Nigeria is not producing as much as we are consuming. It appears there is lack of clarity in the policy direction of the Ministry of Agriculture and Rural Development. There is currently over-emphasis on rice production at the expense of other staple foods. Apart from the Central Bank of Nigeria (CBN) policy on rice production through the Anchor Borrowers’ Programme, the Federal Government has done little in this regard to complement the efforts of the apex bank that will boost food production. .
The government should strive to fix the challenges facing the agricultural sector, including inactive research institutes, poor infrastructure, and inconsistent policies and low funding. The current production level in the agriculture value chain is too low to meet the increasing food demand. It bears repeating that the attention the government is giving to the agriculture sector is still below expectation. The farmer/herder clashes across the country have had negative impacts on food production. Experts also believe that the recent hike in Value Added Tax (VAT) to 7.5 per cent from five per cent, which came into force in February, may further fuel inflation rate when its impact begins to be measured in March.
We, therefore, urge the government at all levels to address the issues that caused rising prices of goods and services. No doubt, inflation will continue to rise more than the current 12.13 per cent if nothing is done to curb it. This will further reduce the purchasing power of most Nigerians who are already at the receiving end of many government’s inimical policies. With the country heading towards planting season, the increase in the January headline inflation should be taken as a wake-up call for the CBN to stabilise prices and set inflation ceiling. The CBN must maintain the inflation target of nine per cent. Anything above this ceiling is bad for the economy. The inflation rate of 12.13 per cent is a setback for monetary policy, and government must do something urgently to address it.
