On Inflation

By Tolu Ogunlesi

We saw food and cooking gas prices go up significantly in Nigeria in 2021. Quite troubling indeed.

But it’s also very important to situate these price increases within a global context — so let no one try to behave like rising prices are unique to Nigeria.

These are the things that credible journalism should do, in my view — this constant nuancing and contextualizing of important issues. (Nobody is asking the media to ‘defend’ ‘government’, no, the simple point is that responsible journalism means painting a full, rounded picture of scenarios and situations, at all times).

If anything, inflation in Nigeria actually trending downwards between March and November 2021, after peaking at 18.71% in March. [November 2021 headline inflation was 15.4%, the lowest in 12 months, but December saw a reversal of that 8-month trend, with an uptick to 15.63%]:

Nigerian inflation downshifts to 12-month low https://www.aljazeera.com/economy/2021/12/15/nigerian-inflation-downshifts-to-12-month-low

This is where I have to point out that declining inflation does NOT mean prices aren’t still high — or rising!

There’s sadly a lot of economic illiteracy around the concept of inflation — what it means for inflation to decline is that the rate of the increase in the general prices of goods and services is slowing, ie prices are still rising but at a slower rate than before.

Having said that, I fully believe that governments everywhere, in Nigeria (at Federal and subnational levels!) and around the world, have a responsibility to do everything to cushion the impact of these rising prices on their citizens.

(One example from Nigeria is the NNPC’s ongoing intervention to reduce cooking gas prices: https://punchng.com/nnpc-to-halt-rising-cooking-gas-price-increases-supply/)

Punch reported this encouraging story about cooking gas recently: “Cooking gas price drops, supply rises, govt projects further decrease.” https://punchng.com/cooking-gas-price-drops-supply-rises-govt-projects-further-decrease/

Of course a big driver of the increase (and recent decrease) has been global prices.

This is a quote from the article: “If you look at the international pricing of the LPG, and that might change again because it is not a fixed price, in January last year, it was $250 per tonne. It rose to $875 per tonne by the end of October and started dropping by the end of November into December, and came down to around $500 per tonne at some point but went up again in December to $708 per tonne. Now, as of the third of January this year, that figure is $744 per tonne. So you can see there is a drop from about $800 around November to $700 in January. The issue here is that the price has been fluctuating.”

Summary is that some of the drivers of these scenarios are local, while others are global.

Below are a couple of examples I have compiled from around the world, to show how Nigeria is by no means an outlier in the ‘rising cost of living’ scenarios. Many countries around the world are grappling with similar things.

2022 will be interesting in terms of the various national responses to these challenges, including in Nigeria.

Here we go:

GLOBAL

Global food prices rose for the 12th month in a row in May, up nearly 40% year over year, according to the United Nations’ food price index. Last month was also the sharpest monthly rise in average food prices in over a decade, spiking 4.8% from April to May. https://amp.cnn.com/cnn/2021/06/04/business/inflation-food-prices/index.html

World food prices hit 10-year high in 2021 https://www.reuters.com/markets/europe/world-food-prices-hit-10-year-peak-2021-2022-01-06

Global shoppers feel the pinch of rising food prices https://www.ft.com/content/7365e386-c3de-4878-9b79-6ab5010822e1

USA

“In November, US meat prices were up 12.8% year-over-year, surpassing the overall inflation rate of 6.8%, according to the US Bureau of Labor Statistics.” https://qz.com/2109385/can-the-white-house-actually-do-anything-about-high-meat-prices/

America is finishing the year with decades-high inflation. That doesn’t bode well for 2022. Prices have climbed so high it will take some time for them to come back down to earth. In other words, the uncomfortable inflation numbers of 2021 will likely stay with us well into the New Year. https://amp.cnn.com/cnn/2022/01/01/economy/inflation-prices-2022-preview/index.html

‘It has never been like this’: US house price spiral worries policymakers:

“Nationally, house prices in May were 16.6 per cent higher than the year before, according to the latest S&P CoreLogic Case-Shiller index update — the biggest jump in more than 30 years of data and up from 14.8 per cent in April.” https://www.ft.com/content/36cdd5d2-18af-4745-88e8-b101fd4cab3f

UK

“Millions of families face ‘seismic’ energy bill rises this year — forcing many cash-strapped people to choose between heating their homes or eating. Experts predict the average annual bill of £1,277 could surge 46% to £1,865 when the energy price cap lifts in April, then pass £2,000 with a 20% rise at the next review in August.” https://metro.co.uk/2022/01/04/millions-of-families-may-have-to-choose-between-eating-and-heating-15859296/

Food and drink firms are seeing “terrifying” price rises, a sector trade body has said, warning of a knock-on effect for consumers. Food and Drink Federation boss Ian Wright told MPs inflation is between 14% and 18% for hospitality firms. https://www.bbc.co.uk/news/business-58962049.amp

Food price inflation reached a 14-month high in October with the prices of favourite snacks such as crisps and soft drinks rising the most, according to new figures.

GHANA

Ghana fuel prices: Why fuel prices rise from $0.8 to $1.14 dollars from Jan to Nov. 2021 https://www.bbc.com/pidgin/tori-59326366

Ghana’s inflation rate increased to the highest in more than four years in November, exceeding the central bank’s target band for a third straight month as food and transport costs climbed. https://www.bloomberg.com/news/articles/2021-12-15/ghana-inflation-rate-climbs-to-four-year-high-beating-forecasts

CANADA

Soaring house prices stoke fears of Canada ‘cost of living crisis’:

“Nationally, average selling prices hit a record high in March 2021, up 31 per cent year-on-year, to more than C$715,000 ($575,000), according to the Canadian Real Estate Association.” https://www.ft.com/content/77e2ec21-f823-4291-9cb6-e992c1ad69e6

FRANCE

At a Paris Market, Costs Rise, Even for the Humble Baguette: Soaring inflation in Europe is starting to squeeze shopkeepers and consumers. Many are preparing for more price increases in the new year https://www.nytimes.com/2021/12/22/business/paris-france-inflation-prices.html

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And of course, everywhere in the world, citizens are putting all the blame on their political leaders, naturally.

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Digital Communications for Nigerian Government, Journalist on Sabbatical

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