Inflation rate to reduce soon, monthly inflation easing – Rewane

Bismarck Rewane, Chief operating Officer (COO) of Financial Derivatives Company (FDC) Limited and member the country’s Economical Advisory Council is optimistic that inflation rate which rose to a 17-year high may soon head southward again on the back of some favourable factors.
According to a publication by the FDC, Rewane appear to be sure that, when Gross Domestic Product (GDP) numbers are released August 26, if positive might see the Monetary Policy Committee (MPC) leave benchmark unchanged.
In addition, he is positive that, with harvest season beginning from the third quarter, prices of food, a major constituent of the food basket may be forced to beat a retreat.
Another cheering news that will like force down inflation, he said, is the fact, global oil prices have reduced from a high of $125 per barrel to $93 per barrel. This, according to him, could be seen in global inflation which is already receding.
What is more, Rewane said, consumers are broke and so, they are ‘living on a shoestring. There is also a consumer price resistance, as they are forced to eat less.
Another good development is that, naira has appreciated to N680 per dollar from N715 per dollar, while diesel price is also down from N820 per litre to N775 per litre.
Inflation rose to 19.64 per cent in July, compares to 18.6 per cent recorded in the previous month of June 2022.
The last time Nigeria’s inflation was above 19.64 per cent was in September 2005 when it rose to 24.32 per cent, according to Nairalytics, a web portal that publishes Nigeria’s historical macroeconomic data. Notably, the uptick in the inflation rate was driven by increases in the food and core index.
Further breakdown of the report showed that the urban inflation rate rose by 2.08 per cent to 20.09 per cent in July 2022 from 18.01% recorded in July 2021, while the rural inflation rate hit 19.22 per cent from 16.75 per cent recorded in the corresponding period of 2021.
Food inflation
The closely watched indicator rose to its highest level in 14 months, standing at 22.02 per cent in July 2022, representing a 1.42 per cent-point increase compared to 20.6 per cent recorded in the previous month. On a month-on-month basis, the food inflation rate in July stood at 2.04 per cent, this is 0.01 per cent lower than 2.05 per cent recorded in the previous month.
According to the NBS, the rise in food inflation was caused by increases in prices of bread and cereals, food products, potatoes, yam and other tubers, meat, fish, oil, and fat.
Meanwhile, the average annual rate of food inflation for the twelve-month period ending July 2022 over the previous twelve-month average was 18.75 per cent, which represents a 1.42 per cent points decline from the average annual rate of change recorded in July 2021 (20.16 per cent).
The ‘’All items less farm produce’’ or Core inflation, which excludes the prices of volatile agricultural produce stood at 16.26 per cent in July 2022, compared to 15.75 per cent recorded in the previous month. This also represents the highest core inflation rate since January 2017, when the rate stood at 17.8 per cent.
On a month-on-month basis, the core inflation rate was 1.75 per cent in July 2022. This was up by 0.20 per cent when compared to 1.56 per cent recorded in June 2022.
Notably, the highest increases were recorded in prices of Gas, Liquid fuel, Solid fuel, Passenger transport by road, Passenger transport by Air, Garments, Cleaning, Repair and Hire of clothing.
Akwa Ibom State recorded the highest inflation rate in the month under review with 22.88 per cent, closely followed by Ebonyi State with 22.51 per cent. Others include Kogi (22.08 per cent), Bayelsa (21.6 per cent), and Rivers State (21.37 per cent).
In terms of food inflation rate, Kwara State recorded the highest with 29.28 per cent, followed by Akwa Ibom (27.22 per cent). Kogi State recorded 26.08 per cent food inflation rate in July 2022, while Ebonyi, and Ekiti State recorded 25.83 per cent and 24.78 per cent respectively.

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