The inflation rate in Nigeria, which was 14.89 per cent as of the last time it was measured in November 2020, has jumped to 15.75 per cent.
The current rate was indicated in the data released Friday by the National Bureau of Statistics (NBS).
The 14.89 percent for November was released in December 2020.
The 15.75 percent (for December) is the highest inflation rate yet in more than three years
The NBS report shows that it was the 16th time Nigeria had witnessed month-on-month increases.
The consumer inflation rate in December 2020 was the highest since November 2017, when it was 15.90 per cent.
According to the NBS, the composite food index rose by 19.56 per cent in December 2020 from 18.30 percent in November 2020.
The Bureau pointed out that “This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam, and other tubers, meat, fruits, vegetable, fish and oils, and fats.”
Reacting to the development, a financial expert, Prof Uche Uwaleke said the reason behind the hike in inflation was due to the huge spendings Nigerians carried out during the Yuletide period.
He said, “The NBS December inflation numbers for December which came in at 15.75% much higher than the 14.89% recorded in November reflects a historical trend in which inflation rate is elevated during this month owing to the demand pressure associated with the yuletide period.
“The inflation rate for December 2020 in particular was excercebated by the lingering effects of border closure, increase in VAT, electricity tariffs and the pump price of fuel. Insecurity may have also accounted for why the food inflation was highest in a State like Edo.
“The rate of increase in Urban inflation gives cause for worry. This may not be unconnected with the rise in rural-urban migration.
“Given that food inflation remains the major challenge, I expect the inflation rate to moderate this year following the intensification of CBN’s interventions in Agriculture and improvements in forex supply, the implementation of the 2021 Agriculture budget and transport infrastructure, border reopening as well as improvements in Security.
“It’s important that the relevant agencies of government plans ahead to tackle flooding issues detrimental to the farming season.”
Analysts at the Financial Derivatives Company Limited, led by foremost economist, Bismarck Rewane, had last week predicted that headline inflation would increase by 0.51 per cent to 15.4 per cent in December, describing it as “a hydra-headed monster that has eroded the disposable and discretionary income of consumers.”
“The continued rise in the general price level is driven largely by forex rationing, output and productivity constraints, higher logistics and distribution costs,” they noted.
The analysts noted that consumer disposable income had been negatively affected by the hike in electricity tariffs, general reductions in subsidies, and improved tax mobilisation.
“We believe the sustained pressure in the food basket is reflective of the impact of the underwhelming harvest season, persistent security challenges in the food-producing regions, and festive induced demand which further widened the demand-supply imbalance,” Cordros Capital Limited said on Friday.
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