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Nigeria's annual inflation rate is showing no sign of abating as the latest data released on Tuesday by the National Bureau of Statistics (NBS) indicates. The Consumer Price Index (CPI) rose to 17.33 per cent year-on-year in February, primarily driven by food inflation, which accelerated further.  
The increase in inflation last month represents the eighteenth consecutive monthly rise in the CPI, which measures inflation. The headline inflation rose by 86 basis points (bps) (or 0.86 percentage point), compared to 16.47 per cent reported in January 2021. It is also the highest inflation rate recorded since February 2017 when the CPI stood at 17.78 per cent.

On a month-on-month basis, the headline index rose by 1.54 per cent in February, or 0.05 percentage point higher than the rate recorded in the previous month (1.49 per cent). The new inflation report shows there were increases in all major indices that yielded the latest data for the main inflation index, including the food index.

Food inflation – which accounts for more than half the inflation basket – increased by 122 bps to 21.79 per cent last month compared to 20.57 per cent reported in January, according to the statistics agency. The food sub-index in February was the highest in more than 12 years.

Based on state profiles, food inflation was highest in Kogi (30.47 per cent), Ebonyi (25.73 per cent) and Sokoto (25.68 per cent), while Gombe (19.32 per cent), Bauchi (18.74 per cent) and Akwa Ibom (18.70 per cent) recorded the slowest rise.

The NBS attributed the rise in the food inflation to increases in the prices of bread and cereals; potatoes, yam and other tubers; oils and fats; fish and meat; and vegetable and fruits.

The latest data shows the headline inflation rate has risen by 513 bps since March 2020, compared to an increase of 89 bps in the 12-month period prior to the outbreak of COVID-19. The movement restrictions imposed by the government to curb the spread of the virus initially contributed to the pressure on food prices.

However, food inflation has continued to surge despite the relaxation of the restrictions and the reopening of Nigerian borders last year. Over the last 12 months, the rate of food inflation has risen by 689 bps compared to a rise of 143 bps in the previous 12-month period.

Core inflation, which excludes the prices of volatile agricultural produce, stood at 12.38 per cent in February, up by 0.53 percentage point when compared to the preceding month. The NBS said the highest increases were recorded in prices of passenger transport by air, pharmaceutical products, hospital, dental and medical services, paramedical services, maintenance and repair of personal transport equipment.

Price increases were also recorded in motor cars and vehicle spare parts, passenger transport by road, repair of furniture, hairdressing salons and personal grooming establishment, and miscellaneous services relating to the dwelling.

As the inflation continues to rise, Nigeria is simultaneously facing weaknesses across other key macroeconomic indicators. On Monday, the NBS said unemployment rate had risen to 33.3 per cent in the fourth quarter of 2020, from 27.1 per cent reported in Q2 of last year. The agency said youth unemployment rate in Nigeria was at 42.5 per cent in Q4 2020. This is coupled with weak economic growth and rising poverty. The country recorded GDP growth rates of 0.11 per cent in Q4 2020 and -1.92 per cent for the year.