Food Shortage, Forex Crisis Push Up Inflation

Soaring food prices and rising cost of living have further the ability of Nigerians to save and derive value from their incomes, independent surveys and forecasts have shown.

The surveys, polled yesterday ahead of tomorrow’s release of the latest inflation rate by the National Bureau of Statistics (NBS), showed Nigeria’s spiralling inflationary trend unabated.

Economic and finance research firms and analysts that had previously predicted the inflation trend, were unanimous that inflation rate has risen by not less than 50 basis points, setting a new high in the past 17 years.

All projections indicated that inflation rate will rise for the ninth consecutive time to between 21.31 per cent and 21.32 per cent in October 2022. Inflation rate had risen 20.52 per cent in August 2022 to 20.77 per cent in September. It was 15.99 per cent in October 2021.

The NBS is scheduled to announce the October 2022 inflation rate tomorrow.

Analysts identified major inflation drivers to currency depreciation, money supply saturation, supply shortages and logistics constraints.

Analysts at Financial Derivatives Company (FDC), which conducts independent consumer price survey, stated that in contrast to the general expectation that harvest would drive down market prices, the food basket experienced a faster rate of price acceleration due to significant shortage in the supply of agricultural products as a result of the floods that ravaged major food-producing states.

Analysts noted that the interaction of higher logistic costs and the exchange rate pass-through effect is also keeping the price of the non-food basket above reach.

The FDC said: “The naira has lost over 15 per cent of its value relative to the dollar in the last one month. Energy prices, including diesel and gasoline, have remained elevated, with diesel price hovering between N790 and N850 in the past month.

“More so, we expect month-on- month inflation to increase by 0.8 per cent to 2.16 per cent as the effect of floods outweighs the benefit of the typical harvest season in the month of October.”