According to the National Bureau of Statistics, (NBS), the consumer Price Index, (CPI) which is a factor in measuring inflation in a country has increased by 14.23 percent (year-on-year) in October 2020, thereby projecting some tougher times for Nigeria, Africa’s largest economy.
In comparison to the 13.71% rate recorded in September 2020, this new data has reflected an O.52 percent increase in CPI and these higher points in October were recorded across all COICOP divisions that yielded the Headline index.
In a related report, the urban index for the month of October gravitated higher by 1.60 percent which in itself is an indication of a 0.04 push from the 1.56 percent recorded in September 2020.
Meanwhile, the rural index also took a higher trajectory, rising by 0.08 percent from the 1.40 percent garnered in September to 1.48 percent for the month of October 2020.
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On the Year-on-Year breakdown, the urban inflation rate spiked up to 14.81 percent increase for the month of October 2020, picking up from the 14.13 percent gathered in the previous month of September. Similarly, the rural inflation rate moved from 13.14 percent in September to 13.68 percent in October 2020.
The Headline Index when computed on a month-on-month basis indicated a 1.54 percent in October 2020 which is 0.06 percent higher than the 1.48 percent rate recorded in September 2020.
RISING INFLATION RATE SINCE JANUARY
On a month on month basis since January, Nigeria has recorded a persistent rise in inflationary ratios.
Border closure, COVID-19 pandemic, floods and a spate of insecurity across the nation remain the major inducing factors.
The persistent increase in inflationary rates has continued to affect the purchasing power of Nigerians, 60% of which are low-income earners.
Experts fear this figure could worsen as the Yuletide approaches. This could lead to the increased poverty level, social insecurities and crimes.
IMPLICATIONS FOR NIGERIA
The country is also battling to keep the naira relevant in the foreign exchange market and with 40 million people projected to be out of jobs by the end of the year and soaring national debt, a rise in inflation rate will leave in it wake, many tributaries of socioeconomic implications for Nigeria.
BUSINESSES MAY REDUCE INVESTMENT
For Businesses, commerce can only thrive in a low and stable inflation rate. This is intended to give investors confidence to keep funding existing investment and initiating new ones, thus keeping the people employed and galvanising the economy. But with Nigeria’s prevailing circumstance, a rise in inflation would result to an increase in the ‘already’ high cost of raw materials and labourers demanding more wages to meet up with the rise in the cost of living. This reality will stall investment interest and companies would hold back on long term projects because of the apparent economic uncertainties.
CONSUMER MAY PAY MORE FOR COMMODITIES
For consumers, inflation comes with a spike in price of household commodities. These rises tends to bolster the threat of an upward spiral in prices. This fear motivates consumers to hit the market, buying more to safe for the Armageddon. This would in turn surge market demand and with supply lingering to meet up, there could be artificial scarcity thereby worsening the situation.
Similarly, an increase in inflation rate can catalyse an increase in interest rate. This therefore put higher interest rates on borrowing costs which will further slow down the rate of investment and economic growth in Nigeria.