High food prices contradict latest declining inflation rate

While latest indicators have shown that the nation’s inflation rate is easing, there are divided sentiments on the reality of the claims as food and other household items remain steadily high, despite various interventions by the government.

According to the National Bureau of Statistics (NBS), the latest inflation rate, for the third consecutive month marginally declined by 0.02 per cent to 17.24 per cent, from the 17.26 per cent recorded earlier in March.

Stakeholders in the real sector had noted that food and other commodity prices would remain high till the second half of 2016 if the Central Bank of Nigeria sustains its intervention in the real sector.

Though the planting season is still in play, there are fears that the Ramadan fast may also spike food prices even as operators seek consistency in government’s intervention through fiscal and monetary policies.

Indeed, NBS report shows that the top items to have recorded the highest increases between April 2016 and 2017 across all the divisions were solid fuels, bread and cereals, meat, liquid fuels, clothing materials, other articles of clothing and clothing accessories, and Fish.

While the inflation rate had stood at 13.7 per cent in April 2016, between March and April 2017, however, the headline index increased by 1.60 per cent in April 2017, 0.12 per cent points lower than the rate recorded in March.

Although, the CBN stated that the composite Purchasing Managers’ Index (PMI) for the non-manufacturing sector is at the edge of growth after 16 months of decline, activities at the retail end reveal a contradiction to the claims by the bank, even as operators believe the impact of the apex bank’s interventions may not be felt until the second half of the year when old stocks may have been sold.

Already, local producers of consumer goods are struggling to maintain a balance in the management of input costs and price consumers are willing to pay for products, even as many continue to increase their inventories for the fear of further instability in the foreign exchange management policy as well as intensify their backward integration agenda.