As of December ’21. Over the past five years, headline inflation in Nigeria has remained in double digits. According to data from the National Bureau of Statistics (SNB), headline inflation stood at 15.63% year-on-year at end-December’21. This is a decline of 13 basis points from the 15.75% year-on-year recorded at the end of 2020.
The average headline inflation rate for 2021 is 16.98%; 377 bps higher than the 13.21% recorded at the end of 2020. According to our estimates, the average headline inflation for the last five years is 14.32%.
Headline inflation followed an upward trend between January and March 21. However, between April and November 21, consecutive declines were recorded in headline inflation, mainly due to positive base effects and policy interventions. CBN in the agricultural sector. December’s rise in the headline inflation rate to 15.63% year-on-year can be attributed to seasonal effects due to increased spending during the holiday season.
Inflationary pressure is still partly due to challenges such as high energy prices, supply chain disruptions due to COVID-19, limited market access and security concerns. For some products, during the past year, the depreciation of currencies on the parallel market has contributed to the increase in prices.
The food inflation rate stood at 17.37% year-on-year at the end of 2021. The average food inflation rate in 2021 is 20.50%, 440 basis points higher than the average of 16 .11% recorded in 2020. Food inflationary pressure can be largely attributed to security issues, high logistics costs, storage issues, post-harvest losses, poor distribution network and supply chain disruptions. supply. There have been significant increases in the prices of staple foods such as bread and cereals,
potatoes, yams, meat, beans, fish, fruits, oils and fats, among others.
For example, it costs N21,000 to buy a 50 kg bag of beans in December ’20. However, a 50kg bag of beans cost 56,000 Naira on December 21. This indicates an annual increase of 167%. The underlying inflation rate was 13.87% year-on-year at the end of 2021. At the same time, the 12-month average of this sub-index stood at 13.14% in 2021; 285 bps higher than the average of 10.29% recorded the previous year. Based on our analysis, the largest increases in the underlying inflation rate in 2021 were recorded in the prices of home textiles, vehicles, clothing, major household appliances, hospital services, food services , among others.
On a y/y basis, imported food price inflation came in at 17.34% y/y at end-December 21, up 68 basis points. This is to be compared with 16.65% y/y in the corresponding period in 2020.
Over the past year, Kogi State recorded the highest overall inflation (nine out of 12 months). Meanwhile, Kwara State recorded the lowest overall inflation (six out of 12 months). It should be noted that household baskets vary from state to state due to different consumption patterns.
Note that Nigeria is not the only African country to have recorded a reversal of the downward trend in its overall inflation. Over the past year, Ghana and Egypt have also recorded increases in their respective headline inflation rates. Factors such as persistent structural problems have contributed to inflationary pressure in Nigeria, while rising fuel prices, cost of electricity as well as health services are some of the reasons for the downward trend. inflation observed in Ghana and Egypt. Although Nigeria and Egypt kept their respective policy rates unchanged, at its meeting held on November 21, the Bank of Ghana (BoG) raised its policy rate by 100 basis points to 14.50% due to the rise in inflation.