PDP, LP fire FG as costs of food items drive inflation to 26.7%
The main opposition Peoples Democratic Party, PDP; and Labour Party, LP, yesterday, railed at the Federal Government and the ruling All Progressives Congress, APC, as costs of food items, others pushed inflation to an 18-year high rise of 26.72 per cent in September.
The Presidency and APC kept sealed lips on the attacks with the National Bureau of Statistics, NBS, fingering increases in prices of oil and fat, bread and cereals, potatoes, yam and other tubers, fish, fruit, meat, vegetables and milk, cheese, and eggs as the causes of the inflation spike.
Contacted, the Presidency declined comments and referred Vanguard to the Finance Minister, Wale Edun, who could not be reached as he is currently in Morocco for the World Bank/IMF summit.
Released on a day the world marked World Food Day, the Labour Party described the soaring prices of food and other items as a verdict on President Bola Tinubu’s reign, just as its presidential candidate in the last election, Peter Obi, lamented that a vast majority of Nigerians now spend their entire income on food, which is hardly enough.
The PDP said the report showed that President Tinubu and the APC were not ready for governance.
APC keeps mum
National Publicity Secretary of the ruling All Progressives Congress, APC, Mr. Felix Morka, declined comments, saying, “I don’t have any information on that for now.”
Also, a presidency source declined comments and directed Vanguard to the Finance Minister, who could not be reached as he is currently in Morocco for the World Bank/IMF summit.
NBS report
In its Consumer Price Index, CPI, report for September released yesterday, the NBS said the headline inflation rate rose year-on-year by 26.72 per cent in September 2023, representing a 920 basis point increase, compared to the 25.8 per cent recorded in August.
The Bureau also said that the food index also increased YoY to 30.64 per cent from 29.34 per cent in August.
Headline inflation
NBS said: “In September 2023, the headline inflation rate increased to 26.72 percent relative to the August 2023 headline inflation rate, which was 25.8 percent.
“Looking at the movement, the September 2023 headline inflation rate showed an increase of 0.92 percentage points when compared to the August 2023 headline inflation rate.
“On a YoY basis, the headline inflation rate was 5.94 percent points higher compared to the rate recorded in September 2022, which was 20.77 percent.
“This shows that the headline inflation rate (YoY basis) increased in September 2023 when compared to the same month in the preceding year (i.e., September 2022).”
However, inflation rate slowed month-on-month (MoM) by 1.08 percentage points to 2.1 percent in September from 3.18 per cent in August. NBS added: “This means that in September 2023, the rate of increase in the average price level was less than the rate of increase in the average price level in August 2023.
On food inflation, NBS said: “The Food inflation rate in September 2023 was 30.64 percent on a YoY basis, which was 7.3 percentage points higher compared to the rate recorded in September 2022 (23.34 percent).
“The rise in Food inflation on a year-on-year basis was caused by increases in prices of Oil and fat, bread and cereals, potatoes, yam and other tubers, fish, fruit, meat, vegetables and milk, cheese, and eggs.”
Tinubu, APC, unprepared for governance — PDP
According to the PDP the NBS report simply confirmed how unprepared the President Tinubu-led administration is for the task of governance.
National Publicity Secretary of the party, Mr Debo Ologunagba, in a telephone interview with Vanguard, said: “We are not in the least surprised about the report. It is not particularly news that the prices of food and other items have pushed inflation to 26.72 per cent, it also confirms what we have always told Nigerians about this government.
“When inflation climbed to double digits after the APC took power in 2015, we told Nigerians it can only get worse because the APC can’t give what it does not have. “Like the Muhammadu Buhari administration before it, this administration has pushed more Nigerians further down into poverty. The number of Nigerians living in extreme poverty which stood at over 133 million, representing roughly 64 per cent of Nigerians during the Buhari regime, has risen under Tinubu.
“Nigerians are invited to note that when the PDP was in power, the economy was better managed, inflation was within single digits, the exchange rate of the Naira to the Dollar was around N180 to $1 USD but today, the Naira is the worst performing currency in the world exchanging at over N1,000 to $1USD.
“A 50 kg bag of rice under successive PDP governments sold for no more N8,000 per bag but now you’ll struggle to get the same bag for N50,000 at a time the national minimum wage is just N30,000 per month.
“This is the legacy the APC is leaving behind. We urge Nigerians not to despair, help is coming. We are confident that the Supreme Court which is the last hope of the common man will do justice and return our stolen mandate for our dear nation to return to the path of growth and prosperity.”
NBS report verdict on Tinubu’s rule — LP
In like manner, the LP said the NBS report is a reflection of how badly the President Tinubu-led administration is running the economy.
National Publicity Secretary of the Labour Party, Obiora Ifoh, in a telephone interview with Vanguard, said: “The NBS report pegging the national inflation rate of food prices and other items at 26.72 per cent, is simply a reflection of how badly the Tinubu administration has failed since taking over albeit temporarily on May 29, 2023. “The truth is, you can’t give what you don’t have. He has recruited more image-makers than people who can properly manage the economy. What we have is a trial and error administration.”
Nigerians now spend income on food — Obi
In a post on X, formerly known as twitter,Obi said the food crisis had remained a serious challenge for many households in the country, noting that “a vast majority of Nigerians spend the entirety of their disposable income on food, which is often hardly enough.”
Obi also urged the government to find urgent solutions to the food crisis, saying: “As the global community marks World Food Day today, we must remind ourselves of the present food crisis in the nation, and seek urgent steps to salvage the people from further hunger and starvation.
“Food crisis has remained a serious challenge facing many households in Nigeria, as the country is reported, by Global Hunger Index, to be facing a serious hunger level.
“With more than half of the population living in poverty, a report by the Food and Agriculture Organisation of the United Nations (FAO) has shown that over 90 million Nigerians face food insecurity, thus posing obstacles to a healthy population and human development.
“In the 2023 Global Hunger Index, Nigeria ranked 109th out of the 125 countries measured, showing that we currently battle high levels of hunger. Reports have it that Nigeria’s food inflation rate in August 2023 was about 30 percent on a year-on-year basis.” He also lamented that constant attacks on farmers in the country by armed and terrorist groups were pushing the country towards a hunger crisis.
“The horrible spate of attacks on farmers in Nigeria by armed and terror groups have continued to hinder food production, food supplies and therefore, threatening to push the country deeper into a devastating hunger crisis. Lack of adequate investment in agriculture also contributes greatly to food crisis in Nigeria.
“I have maintained that the vast fertile lands in the North, if put into productive agricultural use, will produce enough food for domestic consumption and for exports, which can give us more revenue than we generate from oil.
“Government, therefore, must invest heavily in agriculture, to ensure sufficient food production for Nigeria and the global world. Happy World Food Day,” he said.
No respite for consumer prices – Analysts
Commenting on the development, analysts at Cardinalstone research said: “There appears to be no respite for consumer prices with headline inflation scaling by 91 basis points to 26.7 percent in September 2023 and sustaining its 18-year high.
“We link the uptick to the spillover effect of currency pressure and the notable jumps in AGO and cooking gas prices, leading to a 69 basis points increase in housing, water, electricity, gas and other fuel, HWEGF.
“Consequently, core inflation rose to a new 2-decade-high of 22.1 percent. Unsurprisingly, food prices also increased by 1.28 percentage points to 30.7 percent with the Famine Early Warning Systems Network, FEWS NET, highlighting the compounding impacts of conflict and increasing incidences of abductions in the North-West and North-Central regions of the country.
“In a surprising twist, MoM inflation rose by 2.5 percent in September, compared to the 3.8 percent reading in the prior month.
“The moderation partly reflects the commencement of some green harvest – sorghums, millet, corn, etc, mostly in the southern part of the country.
“While we understand that the harvesting may be more pronounced in October, which could taper price pressures, we are not convinced that price declines are in the offing.
“For context, we note that headwinds to crop production in the north are still prevalent, stemming from low rainfall, sustained conflicts and lack of financial access to inputs in food-producing states.
“Furthermore, the risk of higher PMS prices is still very likely, with crude oil prices steadied above $90.0/bbl due to the Israel-Hamas conflict. “Although the recent action of the Central Bank of Nigeria, CBN to lift the FX ban on 43 items is directed at reducing parallel market pressure, the positive impact on prices is unlikely in the short term until the CBN intensifies supply. Overall, we expect inflation to average 25 percent in 2023.“ On their part, Senior Research Analyst at FXTM, Lukman Otunuga, in a report
titled:”Nigeria week ahead: CBN rate decision, inflation and oil in focus”, noted that the vicious cycle of rising inflation and interest rates poses a risk to the country’s already fragile economy.
“Nevertheless, inflation remains piping hot in Africa’s largest economy while interest rates are currently at their highest levels since the monetary policy rate was adopted in 2006. “It is worth keeping in mind that the inflation menace continues to draw strength from the removal of fuel subsidies, devaluation of the official Naira and security issues in food production regions. Given how inflation is projected to jump in September to 27.1 percent, the CBN is likely to raise interest rates at its policy meeting this week for the fifth consecutive time.
“This vicious cycle of rising inflation and interest rates certainly presents a risk to Nigeria’s fragile economy. “The question is whether the central bank will move ahead with a 25bp hike or opt for a larger move to tame inflation.”
Pressure felt more in urban areas—Prof Uwaleke
Reacting to the rise in inflation, Prof Uche Uwaleke, President, Association of Capital Market Academics of Nigeria, ACMAN, said: “This pressure is felt more in the urban than in rural areas possibly on account of high transport costs.
“The trend in the inflation rate is quite worrisome given its impact on the purchasing power of the naira and by extension on the poverty level. It is equally partly to blame for the increasing dollarization of the Nigerian economy and the demand pressure in the forex market.
In view of the supply-side factors driving inflation in Nigeria including rising cost of transport, energy, flooding and insecurity, the government must play complementary roles to that of the CBN by tackling insecurity, massive investments in power and agriculture in partnership with the private sector as well as ensuring the speedy resuscitation of the refineries in order to bring down the cost of transport as well as help naira appreciation in the forex market when an end is put to import of petroleum products.”
Key inflation drivers not receding – Muda Yusuf
To the Director/CEO, Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, said that the key inflation drivers are not receding, if anything, they have become even more intense.
His words: “These factors include the depreciating exchange rate, surging transportation costs, logistics challenges, forex market illiquidity, astronomical hike in diesel cost, climate change, insecurity in farming communities and structural bottlenecks to production. These are largely supply side issues.
“Elevated inflationary pressures also aggravate pressure on production costs, weaken profitability, erode shareholders value and dampen investors’ confidence.
“Not many producers or service providers can transfer cost increases to their consumers. The implication is that manufacturers and other investors are taking a big hit. Products with high demand elasticity are more vulnerable.” Yusuf added that urgent government intervention is required to address the challenges bedeveling production, productivity and insecurity in the economy. The real sector of the economy needs to be incentivised to ensure moderation of production costs.
“The government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists. The same is true of investors in the logistics sector.