The latest inflation report released by the National Bureau of Statistics (NBS) shows that in April the headline inflation eased after nineteen successive months of increase. The decline was marginal. Food inflation is still above 20.0% and remains the major driver behind the relatively high headline measure. Over the past six months, March, April and February recorded the highest headline inflation readings at 18.17%, 18.12%and 17.33% respectively.
Food price inflation rose to 22.72% in April. On a month-on-month basis, the food sub-index increased by 0.99% in April '21, compared with a m/m increase of 1.9% recorded in March.
In April the acceleration in food price inflation was mainly driven by increases in prices of coffee, tea and cocoa, bread and cereals, soft drinks, milk, cheese and egg among others. Based on the NBS' Selected food price watch report, the average price of one tin of milk increased by 2.0% m/m and 9.6% y/y in April.
The latest NBS inflation report tells us that the transport segment, which accounts for 6.5% of the basket, posted price increases of 1.1% m/m and 14.9% y/y in April, compared with 1.3% m/m and 14.7% y/y recorded in March.
A separate report from the NBS reveals that the average fare paid by commuters for bus journeys within cities increased by 2.3% m/m and 72.6% y/y in April compared with 4.4% m/m and 82.5% y/y the previous month. Zamfara, Bauchi and Nasarawa states recorded the highest increases.
The same report shows that the average fare paid by commuters for motorcycle journeys, increased by 1.8% m/m and 86.4% y/y. The hike in the price of Premium Motor Spirit (PMS) is a core reason for the increases across transport segment. There are ongoing talks around a further hike in PMS price, this will undoubtedly affect costs across the transport segment.
The price increases recorded in the health segment were 1.1% m/m and 15.9% y/y in April. Over the past eleven months, pharmaceuticals and medical services have featured as leading drivers of core inflation.
In April, increases of 0.9% m/m and 11.2% y/y were recorded for the education segment within the inflation basket. Based on the NBS COVID-19 Impact Monitoring survey (its sixth installment), household income remains precarious and this may limit the financial commitments households are able to make in education and health services, even if schools fully reopen and the government supports more testing and vaccination.
The clothing and footwear segment within the inflation basket recorded increases of 1.1% m/m and 13.2% y/y. Items within this segment do not necessarily feature at the top of consumers' priority spending lists. However, the easing in lockdown restrictions has provided some respite for this industry.
At its latest meeting, the MPC noted that headline inflation remained well above the ceiling of the CBN's 6-9% inflation corridor. This is due to a combination of factors including: the heightened security tensions in the country and deteriorating public infrastructure.
The committee also noted that the strategies put in place to rein in inflation through administrative measures by the CBN to control money supply via liquidity mop-up in the banking sector had started to yield results. Price stability remains the CBN's primary mandate.