Rise In Inflation Rate

The inflation rate for the month of March rose by 0.06 percentage points to 12.26 per cent, the highest-level recorded since April 2018. The rise in inflation was driven by a rise in all components, with core sub-index growing by 0.3 percentage points to 9.73 per cent and the food sub-index by 0.08 percentage points to 14.98 per cent between February and March.

The rise in inflation is despite the decline in money supply in the preceding month to N2,186,723 trillion (-2.7 per cent) and the decline in petroleum prices. The COVID-19 pandemic is likely to further drive food inflation upwards as access to inputs and services is reduced, labour movement is curtailed and inter- and intra-state travel is minimized.

The rise in inflation will be further worsened by the various fiscal stimulus packages deployed to combat the pandemic and its effect. In the coming months, the Monetary Policy Committee (MPC) may consider revising the Monetary Policy Rate (MPR) upwards from 13.5 per cent.