Nigerians are in for a very difficult time following a forecast by the Central Bank of Nigeria (CBN) that inflation might quicken to 16.84 per cent by May 2022.
Inflation was 15.92 per cent in March from 15.70 per cent recorded in February 2022 and the frequent rise in prices of goods and food items have given a clue to a higher inflation rate for April when the National Bureau of Statistics (NBS) announces the new figure any moment from now.
Adenikinju Adeola Festus a member of the Monetary Policy Committee of the apex bank gave the indication in his personal statement at the last committee meeting held in March, stating that the upsurge in the inflation rate was supply-driven, that could compromise long-term investment and economic growth if not properly addressed.
The Federal Ministry of Finance, Budget and National Planning forecasted growth of 4.20 per cent for 2022, but owing to the ongoing Russia Ukraine crisis, the Bank Staff forecast that inflation will continue to rise in the medium term to 16.84 per cent by May 2022,” he said.
Findings in the food markets in Lagos confirmed Adenikinju’s concerns as a 50kg bag of Oloyin (Sweet) beans now sells for N35,700, an 11.1 per cent increase over the previous price of N32,125. Similarly, a large bag of bush mango seed, also known as ‘ogbono,’ increased by 15 per cent to N155,000, up from N135,000.
Also, a medium-sized basket of tomatoes that previously cost N11,250 in April now costs N14,500, a 24.4 per cent increase, while a 50kg bag of garri (white) now costs around N18,000. This is an increase of 11 per cent over the previous month’s average of N15, 000
Olayinka Oyindotu, a resident in the Ojodu/Berger axis of Lagos stated that “the things we buy N50 before now go for N80 while a tin of “derica” of rice now ranges from N350, N400, and N500″ while lamenting that fowl or chicken, and fish are now beyond a common man’s reach except Ponmo (Cow Hides)
The MPC member admitted that the current recovery is fragile, and explained that the projected real GDP growth is not strong enough to support poverty reduction and reduce unemployment rates in the economy, stating that the uncertainty and downside risks to the economy are also quite high and further compounded by the huge insecurity across the country.
“However, I do not believe that we can totally take our eyes away from the rising and persistent inflation build-up in the economy. While I agree that the current inflation is largely supply-driven, warning that inflation expectations must be dealt with to prevent it from compromising a long-term investment and economic growth.
Headline Inflation has risen consistently since November 2021 and the February inflation figure was the fourth straight month of rising in the average price level. There is a build-up of inflation expectations in the economy. This will be compounded by the increased spending associated with electioneering in Nigeria,” he added.
The 15.92 per cent consumer price index, (CPI) of March was 2.25 per cent points lower to 18.17 per cent, the rate recorded in March 2021, indicating that the headline inflation rate slowed down in March 2022 when compared to the same month in the previous year,” the Bureau stated.
The CBN’s inflation projection comes as the National Bureau of Statistics said that Nigerians spent N108.47 trillion on household consumption in 2021 in nominal terms. According to the NBS, the figure was higher than the N97.72 trillion recorded in 2020, indicating an increase of 11 per cent.
In its recent Expenditure and Income Gross Domestic Product report released on Wednesday, household consumption accounted for the biggest share of the expenditure GDP.
According to the Bureau, in the first quarter of 2021, household consumption expenditure was N25.62 trillion, dropping to N24.28 trillion in Q2 2021. In Q3 2021, an increase to N28.53tn was recorded and a further increase to N30.04tn in Q4 2021.
“In nominal terms, household final consumption expenditure grew by 10.92 per cent in Q3, and 6.12 per cent in Q4 2021. The annual growth rate of 11.00 per cent was recorded in 2021. This growth rate was lower by 20.59 percentage points than the figure recorded in the previous year which stood at -9.59 per cent,” the NBS stated.
“On a quarter-on-quarter basis, growth was recorded at 17.53 per cent in Q3, and 5.29 per cent in Q4 2021, compared to the preceding year’s of 22.58 per cent, and 10.05 per cent in the corresponding quarters. Household consumption accounted for 70.85 per cent of real GDP at market prices in Q3 2021, and 71.35 per cent in Q4 2021.”
The Bureau further stated that government expenditure fell year-on-year by 80 percentage points to -34.03 per cent in 2021 from 61.5 per cent in 2020 which is attributed to the high rate of government expenditure in 2020 to counter the COVID-19 pandemic of the period.