More pressures on pockets as food inflation rises to 40%

• High electricity tariff to drive further rise — Analysts

• It’s bad for businesses – NACCIMA

• Small businesses to lose capital base— ASBON

At the backdrop of sustained rise in prices of staple food items in the market, Nigeria has recorded an unprecedented food inflation rate of 40 percent in March 2024.

Economists and financial analysts explained that the development would put more pressure on the purchasing power of average Nigerian and they also predict that the trend will continue for some months before stabilising.

The food inflation drove the headline inflation rate to 33.2 percent, up from 31.7 percent recorded in the month of February.

The figures released yesterday by National Bureau of Statistics, NBS, in its Consumer Price Index, CPI, report for March 2024, represented a 2.09 and 1.5 percentage percentage points increases month-on-month.

But the analysts see a wider headline inflationary rise in this month to 34.6 percent, representing a 2.4 percentage month-on-month rise resulting from the recent hike in electricity tariff.

Electricity tariff hike to drive further inflation – CardinalStone

Analysts at CardinalStone Finance Limited, a Lagos based investment house, indicated that further inflationary upswing should be expected following the recent drastic hike in electricity tariff.

They stated: ‘’The inflation outlook is biased to the upside, a consequence of the recent implementation of a new electricity tariff.

For context, the Nigerian Electricity Regulatory Commission (NERC) have hiked price for Band A customer from N68 to N225 per kilowatt hour.

‘’Nevertheless, we see some downside risk from the recent currency sustainability. ‘’Overall, we project inflation to print 34.6% in April 2024.’’

Further rise will be slower – Alpha Morgan

In the meantime, analysts at Alpha Morgan Capital said: “From our analysis, we project that inflation will further increase but at a continuously slower rate.

We tie this prediction primarily to the recent monetary interventions by the Central Bank of Nigeria in mopping up excess liquidity, curbing volatile exchange rate movement through various aggressive currency interventions, government fiscal policies, such as agricultural interventions, among others.”

Devt is bad for businesses – NACCIMA

Meanwhile, OPS said that the persistent rising inflation could sound the death knell for small businesses in the country, with consequential loss of jobs and worsened insecurity.