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Annual inflation rate drops to 11.61% in May but month-on-month price spikes

The pressure on the spending power of Nigerians declined further, as inflation dropped in May to 11.61 percent, the lowest level in more than two years and its 16th straight monthly drop, latest figures released by the National Bureau of Statistics today show.
The reduction in inflation rate will be good news for the government in an election year. But there could be concerns that the continuous decline could be reversed as month-on-month inflation moved by up 1.09 percent in May, compared to 0.83 percent in April.
The good news is however that the year-on-year inflation rate has fallen from 12.48 percent in April, while the food price index showed inflation at 13.45 percent in May, compared with 14.80 percent in April.
The decline in food inflation is also good news, since it has been in double digits for almost three years, but has now slowed in the last six months.
Potatoes, yams and other tubers, as well as vegetables, fish, bread and cereals, recorded the highest increases in prices.
Inflation in the urban areas, at 12.08 percent, remained higher than the inflation in the rural areas which stood at 11.20 percent. In both urban and rural areas, there are indications of increasing pressure on inflation as month-on-month inflation gathered pace.
There are fears that pre-elections spending and the more than N9 trillion 2018 budget could act as spoilers to the consistent decline in inflation witnessed in the last one and a half years.
Worried by inflation concerns, the Central Bank of Nigeria (CBN) last month, left benchmark rates steady for the tenth straight time, in a wait and see approach to allow clarity on how far the huge anticipated spending from a combination of the over N9 trillion 2018 budget, expanded monthly disbursements by the Federation Accounts Allocation Committee (FAAC), election spending, among others, could have on price stability.
The post Annual inflation rate drops to 11.61% in May but month-on-month price spikes appeared first on BusinessDay : News you can trust .

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