Inflation in Africa’s largest economy Nigeria jumped to a record high in the month of September as prices continue to escalate across the board.
Consumer Price Index, which measures the inflation rate, increased at 20.77% rate in the month under review, the highest in 17 years, according to the National Bureau of Statistics (NBS). This was 0.25% higher than the 20.52% recorded in the preceding months of August 2022 and 4.14% more than the 16.63% filed in September 2021, Investors King research has shown.
On a monthly basis, inflation moderated by 0.41% to 1.36%, down from 1.77% recorded in August 2022.
Economic uncertainty amid a persistent increase in prices of goods and services in Nigeria had bolstered headline inflation in the month.
The bureau attributed the increase to three main factors: disruption in food supply due to flooding, herders and farmers crisis, persistent increase in the cost of production despite the decline in the value of the Nigerian Naira against global counterparts.
For a nation that depends on imports for over 90% of its consumption, the strength of the local currency and foreign revenue generation are important determinants in ascertaining Nigeria’s economic performance. But the unfathomable oil theft and deterioration of key oil facilities had left the once Africa’s largest crude oil producer and exporter scrambling for crude oil to sell.
Nigeria’s crude oil production dropped below 1 million barrels a day in September 2022 for the first time. Meaning, in spite of the increase in global oil prices following Russia’s invasion of Ukraine, Nigeria has not been able to take advantage of this increase like Angola, Saudi Arabia, and other oil-producing nations.
However, without crude oil to sell, crude oil-backed local currency, Naira, will continue to decline against the U.S. Dollars, China’s Yuan and currencies of other key trading partners that most Nigerians import goods for local consumption from.
This foreign exchange differential is eventually passed on to local consumers already struggling with minimum wage, high-interest rate of 15.5%, 33.33% unemployment rate and instability ahead of the 2023 election.
