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Inflation: Nigerians getting poorer –Analysts

Nigeria’s inflation rate hit 14.89 per cent in November 2020, the highest since 2018 when the rate stood at 15.13 per cent. On a month-on-month basis, the Headline index increased by 1.6 per cent in November 2020. This is 0.06 per cent points higher than the rate recorded in October 2029 (1.15 per cent).

 

The food index, which accounts for more than half the inflation basket, rose 18.3 per cent, compared with 17.4 per cent in October. That is the highest rate since January 2018. Costs increased 2 per cent in the month. That’s adding to the challenges of an economy in a recession that could push an extra 6.6 million Nigerians into poverty, according to World Bank estimates.

 

According to Bloomberg analysts, President Muhammadu Buhari’s order to restrict dollar access for food and fertilizer imports has driven traders to the parallel market for foreign exchange, where they pay a lot more.

 

They said that the move, aimed at boosting local production, has raised costs for importers and added to upward pressure on food prices. Attacks on Nigerian farmers have also pushed down food reserves, raising the price of key staples. Annual inflation has been above the 9 per cent top of the Central Bank of Nigeria’s target range since 2015.

 

The International Monetary Fund (IMF) said the rate could remain in double-digits unless authorities reform monetary policy to focus on price stability.

 

It added that extra interestrate cuts after 200 basis points of easing this year are unlikely to give an additional boost to the economy. Prof. Steve Hanke, an American Applied Economist at Johns Hopkins University in Baltimore, Maryland, USA, expressed his dissatisfaction over the performance of Buhari’s administration.

 

According to him, the Federal Government could do more than what it is doing. He described the administration as a failure over ensuring security of its citizens, unemployment and inflation. He tweeted: “President Muhammadu Buhari has failed. Nigeria is in the grip of chaos. Bandits control major highways.

 

“The government can’t protect its own citizens from Boko Haram or the corrupt Police. Unemployment stands at 27.1 per cent, and Inflation, which I accurately measure every day and that soars at 30.37 per cent/yr.”

 

Food inflation accelerated 115.5% in five years

 

Nigeria’s food inflation has risen by 110.5 per cent in five years, between September 2015 and September 2020. A comparison of the Composite Food Index (CFI) within the period under review indicated that food inflation rose from 181.8 index points to 382.7 index points. This means that the price of food items has not only increased, but more than doubled in the last five years of President Muhammadu Buhari’s administration.

 

Data obtained from Nairalytics, the research arm of Nairametrics, revealed that: Foreign rice (Caprice) which sold for an average of N14, 500 as of May 2019 is now sold for an average of N30, 000. A 50kg bag of Ijebu garri that sold for N7, 200 in May 2019, now costs N13, 700.

 

A 25-litre keg of vegetable oil sold for N9, 750 in May 2019, now sells for N14, 625. A piece of frozen fish which cost N417 in May 2019, now sells for N625.

 

According to Cheta Nwanze, lead partner at SBM Intel, analysis of the index’s historical data shows the national average cost of cooking a pot of Jollof rice for a Nigerian household has nearly doubled since July 2016. Given how essential and widely eaten Jollof rice and its ingredients are, it paints a difficult picture of how Nigerian households have to spend more money on food.

 

With nearly 90 million Nigerians living in extreme poverty—the largest global population, the unending rise of food prices also means food is increasingly out of reach for the poorest Nigerians.

 

NBC Price Watch

 

The latest National Bureau for Statistics (NBS) Price Watch report for the month of December 2020 indicates that the average price per litre paid by consumers for National Household Kerosene reduced by 0.17 per cent from N353.38 in November 2020 to N352.79 in December 2020.

 

Also according to the report, the average price per gallon paid by consumers for National Household Kerosene reduced by 3.52 per cent from N1, 218.50 in November 2020 to N1, 175.59 in December 2020. Kerosene has remained an important source of energy for cooking for most families, both in the rural areas and cities.

 

Kerosene is mostly used in rural areas as a source of lighting. Considering that food and lighting are very essential to life, it is therefore important that the price paid for Kerosene is quite reasonable and as well as affordable for consumers.

 

Food inflation The closely watched index rose sharply by 19.56 per cent in December compared to 18.3 per cent recorded in the previous month. On a month-on-month basis, the food sub-index increased by 2.05 per cent in December 2020, up by 0.01 per cent point from 2.04 per cent recorded in November 2020.

 

The rise in the food index was caused by increases recorded in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.

 

Bringing down the rising inflation

 

According to Prof Sera Olanrewaju Anyanwa, Head of Department of Economics  University of Abuja, ending poverty in Nigeria will entail improving the country’s economic productivity and opportunities for its citizens.

 

“This will mean investing in human capital potential and creating jobs for women and young people, increasing financial access and opportunities to these groups in rural communities, and advancing technological innovation. “Nigeria ranks 152 out of 157 countries on the World Bank’s Human Capital Index.

 

One of the low-hanging fruits would be to embrace educational reforms that focus on developing new skills through robust and well-funded technical and vocational education and training programmes for those millions of Nigerians outside the formal school system, or who possess only a primary education.

 

Unlocking private-sector partnerships through incentives and social impact bonds as well as boosting entrepreneurial ecosystems (with strong emphasis on apprenticeships) are key ways the government can help to spur growth, as has been proven in other countries,” she said.

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