By Tony Obiechina, Abuja
Economic expert and Capital Market Professor, Uche Uwaleke has said that the uptick in Nigeria’s inflation rate was expected and would remain so until the harvest season.
Nigeria’s inflation recorded its highest increase this year, rising to 13.22 per cent in August, the National Bureau of Statistics has announced.
According to NBS data released on Tuesday, the 13.22 per cent inflation rate is the highest since April 2018.
The NBS, in its latest consumer price index report, said, “The consumer price index, which measures inflation increased by 13.22 percent (year-on-year) in August 2020. This is 0.40 percent points higher than the rate recorded in July 2020 (12.82 percent).
“On month-on-month basis, the headline index increased by 1.34 percent in August 2020. This is 0.09 per cent higher than the rate recorded in July 2020 (1.25 per cent).”
The composite food index rose by 16 per cent in August, compared to 15.48 per cent in July, according to the statistics office.
“This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits, oils and fats and vegetables,” it added.
Speaking on the development, Prof of capital market at the Nasarawa State University, Keffi, Uche Uwaleke said that the uptick in inflation rate in August was expected and will likely continue till the harvest season sets in.
According to him, this is particularly so given the fact that the inflationary pressure is coming more from the food component which increased by as much as 16%.
He said that it was not difficult to see where the pressure is coming from.
”The economy is still reeling from the negative impact of COVID’19 on the food supply chain. This situation is compounded by the border closure, increase in VAT, electricity tariffs, stamp duties and upward exchange rates adjustment by the CBN in order to ease the pressure on the forex market, ” he said.
The capital market expert noted that the recent increase in pump price of fuel presents further downside risks to inflation.
”There is also the insecurity challenge affecting the food belts of the country which partly explains the high rate of food inflation, at over 20%, in a state like Kogi.
”As I mentioned earlier, I expect the inflation rate to moderate towards the end of Q4 2020 in the wake of the harvest season as well as a likely increase in external reserves following gradual recovery in crude oil price which helps stabilise Exchange rate.
”I also think the COVID’19 interventions by the government and the CBN especially in the Agric value chain will begin to manifest in Q4 2020.
”The way forward to rein-in inflation is for the government to tackle insecurity so that farmers can return to the farms and put in place a deliberate policy to promote large scale mechanized Agriculture, ” he added.
This, he suggested, would involve scaling up interventions in Agriculture including through recapitalizing Development Finance institutions such as the Bank of Agriculture.