Nigeria’s inflation rate for the month of March 2021 has risen to an all-time high as the recently released data by the National Bureau of Statistics (NBS) report that the Consumer Price Index rose to 18.17% from 17.33% recorded in February 2021. This represents 0.82% points higher than the February figures.
On a month-on-month basis, the Headline index increased by 1.56% from 1.54% in February 2021, representing 0.02% points higher than the rate recorded in February 2021. If the rise in the monthly rate becomes a point of inflexion rather than a blip, the chances of a more hawkish monetary policy stance increases in H2’21.
Food inflation at a record high – 22.95%
The year-on-year food inflation spiked to 22.95% from 21.79% recorded in the previous month. On a month-on-month basis, the food sub-index increased by 1.9% in March 2021, up by 0.01% points from 1.89% recorded in February 2021. This rise in the food index was caused by supply shortages, currency pressures and forex restrictions. The commodities that recorded the highest price increases were bread and cereals, potatoes, yam and other tubers, meat, food products, fruits, vegetable, fish and oils and fats.
Core inflation rises to 12.67%
Core inflation rose sharply by 0.29% to 12.67% in March. On a monthly basis, it also increased by 1.06% in March 2021. This is largely due to an increase in Passenger transport prices by air, Medical services, Miscellaneous services relating to the dwelling, Passenger transport by road, Hospital services, Passenger transport by road.
The galloping nature of Nigeria’s inflation will worsen its misery level and trigger social unrest. Addressing this challenge will require the CBN to provide an accommodative monetary policy stance to support growth and keep inflation at the targeted level.