Nigeria inflation rose to a six-year high in May, following a disappointing data in April as the increase in transport fares and other energy prices continues to drive prices of goods and services high.
The Consumer Price Index, which measures inflation rose from 13.7 percent recorded in April to 15.6 percent in May, the National Bureau of Statistics (NBS) showed on Tuesday. The increase was as a result of the surge in the overall price level across the economy.
The report highlighted the increase in fuel prices as the main cause of the surging prices in the country, with the electricity rates and other energy prices rising 15.1 percent year-on-year in May, up by 1.7 percent from the preceding month.
The highest increases were recorded in the passenger transport by road, kerosene, fuels and lubricants for personal transport equipment and vehicle spare parts.
Early in the week, a report showed that the recent increase in the price of fuel to N145 per litre have prompt users to seek alternative or reduce their usage, a situation that has plunged sales by as much as 40 percent.
“If you may agree with me, there has been a light flow of traffic in the Lagos metropolis in very recent times. We however deem this to be the initial reaction and thus believe that the demand will improve over time,” said Mr. Akin Akinfemiwa, the Chairman of Major Oil Marketers Association of Nigeria (MOMAN) and Group Chief Executive Officer of Forte Oil Plc.
Also, gauge of foods climbed 14.9 percent year-on-year from 13.2 percent in the previous month, increase in importation cost contributed to rise in food prices as the imported food index rose the most, 18.6 percent and 2.2 percent more than what was obtained in April.
Prior to the release, Access Bank’s Economic Intelligence unit, said “Continued weakness in the Naira, following the announcement of the deregulation of the downstream petroleum sector has also placed significant pressure on the inflation rate. This will have filtered into consumer prices as some firms may have sourced scarce foreign exchange from the parallel (black) market to import intermediate goods to maintain operations.”
Rising inflation is expected to plunge investor’s returns further, while bond yields likely to rise to compensate for the inflation.