In October 2022, on a year–on–year basis, the headline inflation rate was 21.09%. This was 5.09% points higher compared to the rate recorded in October 2021, which was 15.99%. This shows that the general price level for the headline inflation rate increased in October 2022 when compared to the same month in the preceding year (i.e., October 2021) by 5.09%. 

On a month-on-month basis, the Headline inflation rate for October 2022 was 1.24%, this was 0.11% lower than the rate recorded in September 2022 (1.36%). This means that in October 2022 the general price level for the headline inflation rate (month–on–month basis) declined by 0.11%. 

The percentage change in the average CPI for the twelve months ending October 2022 over the average of the CPI for the previous twelve months period was 17.86%, showing a 0.91% increase compared to the 16.96% recorded in October 2021. 

The increases were recorded in all COICOP divisions that yielded the Headline index. 

Likely Factors Responsible For The Decline In The Monthly Inflation Rate (Month-on-month basis). 

Over the past three months, there has been a decline in headline inflation on a month-on-month basis due to a decline in the changes in the food index relative to the reference month index. This can be due to the present harvesting season.

Likely Factors Responsible For The Increase In Annual Inflation Rate (Year-on-Year basis). 

1. Disruption in the supply of food products 
2. Increase in cost of importation due to the persistent currency depreciation 
3. A general increase in the cost of production e.g increase in energy cost 

Urban Inflation 

On a year-on-year basis, in October 2022, the urban inflation rate was 21.63%, this was 5.11% higher compared to the 16.52% recorded in October 2021. On a month-on-month basis, the urban inflation rate was 1.33% in October 2022, this was a 0.12% decline compared to September 2022 (1.46%). The corresponding twelve-month average for the urban inflation rate was 18.38% in October 2022. This was 0.85% higher compared to the 17.53% reported in October 2021. 

Rural Inflation 

The rural inflation rate in October 2022 was 20.57% on a year-on-year basis; this was 5.09% higher compared to the 15.48% recorded in October 2021. On a month-on-month basis, the rural inflation rate in October 2022 was 1.16%, which was down by 0.11% compared to September 2022 (1.27%). The corresponding twelve-month average for the rural inflation rate in October 2022 was 17.38%. This was 0.98% higher compared to the 16.39% recorded in October 2021

Food Index

The food inflation rate in October 2022 was 23.72% on a year-on-year basis; which was 5.39% higher compared to the rate recorded in October 2021 (18.34%). The rise in food inflation was caused by increases in prices of Bread and cereals, Food products n.e.c, Potatoes, yams and other tubers, oil and fat. 

On a month-on-month basis, the food inflation rate in October was 1.23%, this was a 0.21% decline compared to the rate recorded in September 2022 (1.43%). This decline was attributed to the reduction in prices of some food items like Tubers, Palm oil, Maize, Beans, and Vegetables. 

The average annual rate of food inflation for the twelve months ending October 2022 was 19.83%, which was a 0.92% points decline from the average annual rate of change recorded in October 2021 (20.75%).

All Items Less Farm Produce

The ‘’All items less farm produce’’ or Core inflation, which excludes the prices of volatile agricultural produce stood at 17.76% in October 2022 on a year-on-year basis; up by 4.52% when compared to 13.24% recorded in October 2021. 

On a month-on-month basis, the core inflation rate was 0.93% in October 2022. It was 1.59 % in September 2022. 

The highest increases were recorded in prices of Gas, Liquid fuel, Passenger transport by Air, Solid fuel, and vehicles spare parts. 

The average 12-month annual inflation rate was 15.31% for the twelve months ending October 2022; this was 2.59% points higher than the 12.73% recorded in October 2021.

State Profiles

In analysing price movements under this section, it should be noted that CPI is weighted by consumption expenditure patterns which differ across states and locations. Accordingly, the weight assigned to a particular food or non-food item may differ from state to state making interstate comparisons of consumption baskets inadvisable and potentially misleading. 

All Items Inflation 

In October 2022, all items inflation rate on a year-on-year basis was highest in Kogi (25.15%), Bauchi (23.45%), Ondo (23.45%), while Plateau (19.02%), Borno (19.31%) and Nasarawa (19.39%) recorded the slowest rise in headline Year-on-Year inflation. On a month-on-month basis, however, October 2022, recorded the highest increases in Abuja (3.18%), Kebbi (2.80%), Sokoto (2.57%), while Kwara (-0.14%), Kogi (0.06%) and Oyo (0.30%) recorded the slowest rise on month-on-month inflation. 

Food Inflation 

In October 2022, food inflation on a year-on-year basis was highest in Kwara (30.79%), Kogi (28.74%) and Imo (28.64%), while Kaduna (19.96%), Plateau (20.17%) and Jigawa (20.42%) recorded the slowest rise in year-on-year food inflation. On a month-on-month basis, however, October 2022 food inflation was highest in Sokoto (3.55%), Yobe (3.31%) and Kebi (3.16%), while Kwara (-0.76%), Kogi (-0.55%) and AkwaIbom (-0.21%) recorded the slowest rise on month-on-month inflation.

As MF Alleges CBN’s financing of fiscal deficit complicates fight against inflation

The International Monetary Fund (IMF) says the Central Bank of Nigeria’s financing of the country’s fiscal deficit complicates its fight against inflation.

Ari Aisen, IMF’s resident representative for Nigeria, said this during a panel discussion at the 28th Nigerian Economic Summit (NES#28) on Tuesday in Abuja.

The summit was themed ‘2023 and beyond: priorities for shared prosperity’.

Aisen’s comment comes the same day the National Bureau of Statistics (NBS) announced that Nigeria’s inflation rate had jumped to 21.09 percent in October 2022.

The IMF official said global shocks and recent domestic shocks such as flooding which affected food prices, make it increasingly difficult for the central bank to control inflation.

Asked to make recommendations for strengthening the monetary policy framework, Aisen said: “The recent hike in interest rates by 400 basis points and trying to control inflation is already an important aspect of monetary policy. It’s what central banks typically like to do.”

“The problem is that if you do this but on the other hand, you try to accomplish the other objectives which includes supporting agriculture, supporting growth, it tends to create a dichotomy whereby liquidity increases. Then, it may not be very simple to mop up that extra liquidity that is injected.

“Also, fiscal deficit is very large and the statutory limit by the CBN act of 5 percent of prospective input of maximum financing should be respected. Otherwise, the financing through money creation will be inflationary. You all know about the ‘ways and means’ that have accumulated over several years now.

“Hopefully, there is a solution for the past but going forward, that modus operandi whereby the central bank is financing deficit is going to complicate things in terms of inflation fighting.

“So I think, just to conclude on these thoughts, there should be more clarity on the primacy of price stability, getting support from other policies to achieve the central bank’s secondary goal of growth, development, which are legitimate goals of the country, and focus on spacing out some of the lending through the banking system that is expending liquidity that is difficult to mop up.”