Nigeria’s February headline inflation jumped to a 4-year high of 17.33%. This is 0.86% higher than the January figure (16.47%). It is also the 18th consecutive monthly increase. The inflation spiral is driven mainly by rapidly increasing ways and means advances (money supply saturation), commodity supply disruptions, forex rationing and exchange rate pass through. The currency adjustment has affected all imported commodities – wheat, dairy products, etc. Cost push inflation increased partly due to re-pricing of PMS and kerosene.
February inflation is almost 100% above the CBN’s inflation ceiling of 9%. Rising inflation at a time when unemployment remained stubbornly high means that the trade-off between inflation and unemployment as espoused by the Philips curve no longer exist i.e. Nigeria now has an upward sloping Philips curve. This will further increase the country’s misery level (now at 50.63%), which could trigger social unrest.
In the download and link, the FDC Think Tank shares its thoughts on the impact of February’s inflation numbers on the economy.
Enjoy your read…