CBN urged to halt interest rate hike as food inflation drops to 37.52%

The National Bureau of Statistics (NBS) has said that the Food inflation rate dropped in the month of August 37.52% on a year-on-year basis.

This is as headline inflation dropped to 32.15%, a second consecutive drop in two months.

In a report, the NBS explained that the figure, on a month-on-month basis, was 2.37% which shows a 0.10% decrease compared to the rate recorded in July 2024 (2.47%) due to reduction in prices of tobacco, tea, cocoa, coffee, groundnut oil, milk, yam, Irish potatoes, water yam, cassava tuber, palm oil, and vegetable etc.

It, however, noted that on a year-on-year basis, the figure was 8.18% points higher compared to the rate recorded in August 2023 (29.34%) and was caused by increases in prices of the following items, bread, maize grains, guinea corn, etc (bread and cereals class), yam, Irish potatoes, water yam, cassava tuber, etc (potatoes, yam & other tubers class), palm oil, vegetable, etc (oil & fats class) and Ovaltine, Milo, Lipton, etc (coffee, tea and cocoa class).

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It added that the average annual rate of Food inflation for the 12 months ending August 2024 over the previous 12-month average was 36.99%, which was 11.98% points increase from the average annual rate of change recorded in August 2023 (25.01%).

Food inflation on a year-on-year basis was highest in Sokoto (46.98%), Gombe (43.25%), and Yobe (43.21%) while Benue (32.33%), Rivers (33.01%) and Bayelsa (33.36%), recorded the slowest rise in Food inflation on Year-on-Year basis.

On a month-on-month basis, however, August 2024 Food inflation was highest in Adamawa (5.46%), Kebbi (4.48%), and Borno (3.88%, while Ogun (0.08%), Akwa-Ibom (0.45%) and Sokoto (1.00%) recorded the slowest rise in Food inflation on a month-on-month basis.

It went on to state that on a year-on-year basis, August 2024 Urban inflation rate was 34.58%, a 6.89% points higher compared to the 27.69% recorded in August 2023 while rural inflation rate was 29.95% was 5.85% higher compared to the 24.10% recorded in August 2023.

While “All items less farm produce and energy” or Core inflation, which excludes the prices of volatile agricultural produces and energy stood at 27.58% in August 2024 on a year-on-year basis; up by 6.43% when compared to the 21.15% recorded in August 2023.

“The highest increases were recorded in prices of the following items, Rents (Actual and Imputed Rentals for Housing Class), Bus Journey intercity, Journey by motorcycle, etc (under Passenger Transport by Road Class), and Accommodation Service, Laboratory service, X-ray photography, Consultation Fee of a medical doctor, etc (under Medical Services Class).”

Food inflation highest in Sokoto state: 46.98% (July: 46.26%) and lowest in Benue: 32.33%

Professor of Capital Market at the Nassarawa State University, Uche Uwaleke said the easing in the headline inflation rate is due chiefly to the moderation in food inflation occasioned by the harvest season.

He said the drought reported in many parts of the North partly explains the high rate of food inflation in States like Sokoto and Kebbi.

Speaking on the increase in core inflation in the month of August, Prof Uwalake said: “What all these point to is that it is time for the CBN to recognize the real pressure points and shift some attention to how the fiscal authorities can be supported to boost food production beginning with a halt in MPR hike this month.

The FG should intervene in the recent ‘oil price dispute’ between the NNPCL and Dangote Refinery in order to stem its negative impact on the general price level.