The Consumer Price Index (CPI)/Headline Inflation/All Item Index
The Consumer Price Index (CPI), which measures inflation rose by 16.63% Year-on-Year (YoY) in Sept’21. This is 0.38% lower than the rate recorded in Aug’21 (17.01%). The headline inflation rate eased for a sixth consecutive month largely as food inflation continued to decelerate despite Naira’s ongoing depreciation.
However, on a month-on-month (MoM) basis, the Headline Index increased by 1.15% in Sept’21, this is 0.13% higher than the rate (1.02%) recorded in the previous month. With both food and core sub-indices on the uptrend, monthly headline inflation continued to rise.
The Food Inflation
The Food sub-index rose by 19.57% YoY in Sept’21 compared to 20.30% in Aug’21. However, on a MoM basis, the food inflation increased by 1.26% in Sept’21, up by 0.20% from 1.06% recorded in Aug’21.
The rise in the food sub-index was caused by increases in the price of oils and fats, bread and cereals, other food products which include fish, coffee, tea, cocoa, potatoes, yam, milk, cheese, and egg.
The Core Inflation / The All Items Less Farm Produce
The “All Items less farm produce” or “Core Inflation”, which excludes the prices of volatile agricultural produce stood at 13.74% YoY in Sept’21, up by 0.33% when compared with 13.41% recorded in Aug’21. Also, on a MoM basis, the core sub-index increased by 1.24% in Sept’21, up by 0.47% when compared with 0.77% recorded in Aug’21.
The highest increases were recorded in prices of gas, household textile, garments, motor car, game of chance, major household appliances whether electric or not, passenger transport by air, hospital services among others.
While both yearly Headline and Food Inflation rates continue to benefit from the impact of the high base effect, to secure half a year of moderation in their respective indices, the core index on the other hand remains pressured by multiple inflationary drivers, particularly those pertaining to currency depreciation and energy cost. On a monthly basis, all indices inched up in September 2021, due to the depreciation of the Naira (as the I&E FX rate weakened by N1.26/$ to average N412.76/$ in Sept’21), increase in the cost of cooking gas (as it increased by over 15% in the period under review) and a rise in the price of diesel (as it increased by N10 per litre to N295 per litre). All these, in addition to the inadequacy of food production and supply drove up prices on a monthly basis.