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Electricity, gas prices push inflation to 8.2%

By BusinessNews Staff on February 18, 2015

The National Bureau of Statistics on Monday released the Consumer Price Index for January, stating that increase in the prices of non-food items such as electricity, gas and other fuels had pushed inflation up by 8.2 per cent.

The bureau, in the inflation report made available to our correspondent in Abuja, said the 8.2 per cent year on year rise represented a 0.2 percentage point increase over the eight per cent recorded in December 2014.

In November last year, inflation rate was around 7.9 per cent. And following the devaluation of the naira by eight per cent by the Central Bank of Nigeria in November last year, analysts had predicted the inflation rate would increase. There were fears that inflation could hit a double digit on the back of the devaluation.

Apart from the increases recorded in electricity and gas prices, the report also listed footwear, housing, water, furnishing, household equipment maintenance items as well as clothing as other major components that pushed up the inflation rate.

The report also showed that while the prices of most items that contributed to the index increased during the period, this was countered by slower rises in food items such as fish, fruit, coffee, tea, cocoa and soft drinks.

The report said, “In January, the Consumer Price Index, which measures inflation, rose by 8.2 per cent (year-on-year), 0.2 percentage points from 8.0 per cent recorded in December.

“All major divisions that contribute to the index increased during the period. Food prices measured by the food sub-index held at roughly the same pace of increase in January as in December, while on the aggregate, upward pressure on the headline index was largely as a result of increasing divisions that contribute to the core sub-index.

“Most groups that contribute to the food sub-index increased at a faster pace during the month. This was countered however by slower rises in the fish, fruit, coffee, tea, cocoa and soft drinks groups.”

For the urban index, the report stated that this increased by 0.3 percentage points to 8.2 per cent in January, while rural prices as recorded by the Rural All Items Index increased marginally from eight per cent in December to 8.1 per cent in January.

On a month-on-month basis, both the urban and rural indices recorded the same pace of increase in January – 0.8 per cent, according to the report.

Financial analysts had warned that the recent devaluation of the naira might further increase the cost of doing business in the country which would be reflected in the high cost of goods and services.

A senior lecturer at the Department of Accounting, Nasarawa State University, Keffi, Dr. Uche Uwaleke, had predicted that with high lending rate and naira devaluation, Nigerians should brace for a drastic reduction in their purchasing power.

Uwaleke said, “I see headline inflation, which is now in single digit, inching up towards 10 per cent this year. And that will be fuelled by the spending owing to political activities. A lot of money will be pushed into the system. And coupled with the naira devaluation, we will continue to depend on imports.

“The devaluation of the naira will certainly lead to an increase in the prices of goods and services. With inflation, there will be a further reduction in purchasing power.”

[Punch]

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