The reason behind the high rise in inflation in Nigeria can be attributed to demand and supply shocks occasioned by the COVID 19 pandemic.
This is contained in a report by PriceWaterhouseCoopers (PwC), Nigeria in a report titled “Nigeria Economic Alert.”
PwC in the report stated that demand and supply shocks from COVID-19 keep inflation higher for longer with no end in sight.
The report indicated that the headline inflation rose by 12.4 per cent year-on-year in May 2020 (the highest in 26 months- from 12.3% in April).
Also, the continued rise in headline inflation was partly caused by the supply shocks to the commodity process and the fallout from the COVID-19 pandemic. These factors have kept the inflation rate above its long-term rate of 11.9 per cent.
For instance, on a month-on-month basis, headline inflation rose the fastest since July 2018 (23-month high) by 1.2 per cent in May 2020. This was due to significant disruptions to domestic and global supply chains on account of the lockdown measures brought on by mitigating the pandemic’s spread”.
According to the report, the economic alert which looks at the impacts of inflationary trends on the economy and also made recommendations for curtailing the persistent rise in prices.
“Deliberate effort to provide adequate support to agriculture and food processing sectors as well as functional and effective price regulatory system.
“Massive support to the real sector of the economy ranging from adequate funding to include tax incentives, while ensuring monetary and fiscal policies foster stability on the supply side of the market”, the report recommended.
It would be recalled that Nigeria’s inflation jumped to 12.40 per cent in May from 12.34per cent in April.
The Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS), showed that the figure represents the highest inflation rate in 25 months since April.
The development, industry experts believed has caused untold hardship to Nigerians who have to pay through their nose to get food items as the prices have now skyrocketed.