For the first time in 21 months, Nigeria's inflation rate hits 12.13% (Analysis)

For the first time in 21 months, Nigeria's inflation rate has shot up from 11.98% recorded in December 2019 to 12.13% in January 2020. This is the highest rate recorded in the country since May 2018, which was 11.61%.

On a month-on-month basis, inflation rose by 12.13% in January, up from 11.98% recorded in December 2019 and 11.85% in November 2019. On the other hand, food inflation rose from 14.67% reported in December 2019 to 14.85% in January 2020.

Another important metric of the inflation index is food inflation, which rose by 14.85% in January 2020 compared to 14.67% recorded in December 2019. According to the NBS report, month on month, the food sub-index rose by 0.99% in January 2020, up by 0.02% points from 0.97% recorded in December 2019.



The average annual rate of change of the Food sub-index for the twelve-month period ending January 2020 was 13.86% from December 2019 (13.74%).

The rise in the food index is occasioned by the increase in prices of Bread and Cereals, Meat, Oils and fats, Potatoes, yam, other tubers, and Fish.

Core inflation which implies all items less farm produce, excluding the prices of volatile agricultural produce rose to 9.35% in January 2020, up by 0.02% when compared with 9.33% recorded in December 2019.

Month-on-month, the core sub-index increased by 0.82% in January 2020. This was up by 0.01% when compared with 0.81% recorded in December 2019. Also, the average 12-month annual rate of change of the index was 9.11% for the twelve-month period ending January 2020; this is 0.04% lower than 9.15% recorded in December 2019.

The report showed that core inflation was driven by increases recorded in prices of hospital services, vehicle spare parts, cleaning, repair and hire of clothing, shoes and other footwear, glassware, tableware, and household utensil, hairdressing salons and personal grooming establishments, repair and hire of footwear, garments and passenger transport by air.

The inflation rate which stands at an all-time high of 12.13% implies a fast rise in the prices of overall goods and services in the economy for the past 21 months.

Also, the report shows that the purchasing power of consumers to buy goods and services has deteriorated. The overlying impact is that consumers can no longer buy the same quantity of goods with a fixed income level.