Nigeria’s annual inflation rate increased to 11.61% in October 2019 from 11.24% in the September, thereby reaching the highest since May 2018. Prices rose mainly for food, due to the on-going closure of the country’s land borders ordered by President Buhari to avoid smuggling of rice and other commodities as well as the impact of unusual heavy rainfall on harvest.
Although the boarder closure is undoubtedly the main reason behind the increase in the Headline Inflation Index, we are of the opinion that this should adjust overtime. We believe that prices are generally controlled by the forces of demand and supply, thus, the increase in the price of few consumables, especially rice will be controlled at the entrants of more players into the business of Rice production.
Research had revealed that most investors shy away from rice business for the fear of importation pressure. Recall that one such company in the name of Dunlop Tyre was frustrated our of the country due to massive importation of low standard tyres. We therefore, believe that should the government show more resilience in stopping importation of products such as rice amongst others, investors will look their ways, this will in-turn build supply and bring down prices.
Prices also rose at quicker pace for housing & utilities (7.62% vs 7.43%); transport (9.07% vs 8.97%), education (8.69% vs 8.64%); health (9.32% vs 9.22%); miscellaneous goods & services (8.83% vs 8.70%); restaurants & hotels (8.24% vs 8.20%); communications (7.88% vs 7.85%) and recreation & culture (8.06% vs 8.0%).
Meanwhile, inflation was steady for clothing & footwear for the third consecutive month (at 9.77%) while it slowed for furniture (9.10% vs 9.14%) and alcoholic beverages, tobacco and Kola (9.93% vs 10.01%).
Annual core inflation, which excludes price of volatile agricultural products, eased slightly to 8.88% from 8.94% in the previous month.
On a monthly basis, consumer prices went up 1.07%, after rising 1.04% in the preceding month.