Food prices, others fall as inflation rates decline to 17.8%

The average cost of goods and services in Nigeria improved for the first time in almost two years following a series of policy implemented by the Central Bank of Nigeria to manage consumer prices and moderate foreign exchange.

The consumer price index which measures inflation rate rose 17.78 percent, year-on-year, in February. This was 0.94 percent lower than 18.72 percent recorded in January, the National Bureau of Statistics reported on Tuesday.

In a report, the NBS said, “This is a result of slower rises in already high food and non-food prices and favourable base effects over prices in 2016. The drop in inflation rate was mainly due to a significant drop in the core inflation sub-index.”

Core inflation is the summation of all items, except food, and this rose by 16 per cent, being the slowest. The decline was attributed to the drop to base effects, a situation where a higher inflationary period in the corresponding year will result in slower growth a year after.

But a separate food index, which listed staple foods like bread, cereal and meat, showed inflation at 18.53 per cent from 17.82 per cent in January. The major divisions responsible for accelerating the pace of the increase in the headline index are housing, water, electricity, gas, education, food and alcoholic beverages, clothing and foot wares and transportation services.

The development, according to analysts at SCM Capital is expected to have a positive effect on consumers’ purchasing power. The deceleration of the month-on-month inflation rate raises hope of recovery for the country’s ailing economy.

However, the Acting Managing Director of Afrinvest Securities Limited, Ayodeji Eboh does not seem too excited about the news. He said it was nothing much to cheer about, as the figure was only a comparison of one year to date, not the change in the current prices of items in the market. “If you check the month-on-month headline index, it is 1.49 per cent in February 2017, 0.48 per cent points higher from the rate of 1.01 per cent recorded in January. This means that things are now costlier than one month ago,” he said.

According to Ayodeji, the lesson from the figures shows that it can only get better, but not yet now and the government would need to introduce or implement policies that are pro-agriculture and its entire value chain, including the cost of transportation of the produce.

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