The National Bureau of Statistics (NBS) has just released May 2016 Consumer Price Index /inflation data. According to NBS headline inflation, year on year, rose sharply to 15.6 percent the highest since February 2010, from 13.7 percent in April. Month-on-month, prices increased by 2.8 percent in May against 1.6 percent in April.
Food inflation rose 14.9 percent year on year against 13.2 percent in April and 2.6 percent month on month when compared with 1.3 percent in April, while Core inflation rose by 15.1 percent year on year, against 13.4 percent in April and 2.7 percent on month on month bases compared with 1.7 percent in April.
NBS noted that Food inflation was driven by rising prices of fish, bread, cereals, potatoes, yams and tubers, vegetables, meats, oil and fats & fruits. Core inflation on the other hand was driven by rising prices of electricity, furniture, fuels & lubricants, catering services, furniture, solid fuels, rent, transport and liquid fuels.
Imported inflation continued to rise at 18.6 percent, the highest since January 2012 in the reviewed period as against 16.3 percent in April. Month-on-month, prices rose by 3.1 percent against 1.9 percent in April, the highest since March 2012. This reflects a protracted pass through consequence of the weak currency, which has continued to impact the prices of both food and non-food items.
Market analyst attributed the current inflation figures to the volatility in the parallel market naira exchange rate in May, following the quasi deregulation of the downstream petroleum sector, allowing fuel importers to source forex outside the official window. Housing, electricity, water, gas and other fuel inflation rose 22.0 percent year on year against 19.0 percent in April and 3.7 percent month on month 3.3 percent in April.
The year on year and month on month figures are record highs and reflect higher energy electricity and fuel prices. Transport inflation rose by 15.6 percent against 14.0 percent in April and 2.7 percent, month on month compared to 1.6 percent in April. The year on year increase is the highest since May 2012 while month on month, it the highest since March 2012.
The NBS reported that the average price paid by households on fuel moderated month on month c.9 percent and higher year on year by 27 percent.
Although for economic watchers, the inflation figure was widely expected, they are of the view that yields in the fixed income and money markets are most likely to adjust to the result. The continued uptrend in inflation suggests that the structural defects that have also resulted in rising unemployment, shrinking consumption expenditure and negative growth are not abating.