Is Headline Inflation Rate figure for All Nigerians?
No, it is not! Some analysts polled by MarketForces Africa said emphatically that one cannot really compare headline inflation to increased street prices. In the food markets, prices have gone through the roof. Healthcare services, education including housing among others have seen a steep increase.
But Nigerian government, or the policymakers who understand the impact of the increased price level, now worsen by the devaluation of the local currency on household consumption remain unfazed with the rising misery index. Nigeria’s minimum wage is the real definition of poverty.
In the real sense of it, the inflation rate measures the speed at which naira is falling. That is where the problem lies because the local currency has multiple quotes. Trust me, I know conservative economists have theories to counter street inflation but it is real.
Even Natural resources that belong to Nigerians have seen heavy price adjustments. Gas is expensive if you see to buy. Kerosene, used mostly by low-class households is more expensive than even PMS.
France will increase the national minimum wage by 2.2% from October 1 to reflect accelerating inflation, the Labour Ministry said on Wednesday.
But France is way better than Nigerian minimum wages and why would the authority thinks they should increase minimum wages? The answer is not far fetched as the labour ministry anchored minimum wage increment to the recent increase in the average price level.
Now, the rise will take the gross minimum wage to 1,589.47 euros per month or 10.48 euros an hour from 10.25 euros previously, according to the ministry.
In Nigeria, we live with inflation – probably because it lives next door to every family. Upward price adjustment is a normal thing here. If raindrops, the price of transport adjusts upward. If the sun shines, commuters increase prices.
Basically, the headline inflation rate is a guide to an average increase in the price level, often applies to financial assets pricing and policy formulation.
In order climes, it could provide a representative of general feeling based on behavioural condition, some analysts explained.
On average, in the last year, prices of goods and services have gone up more than 200%. It would be misguided information for rural dwellers to rely on the National Bureau of Statistics as a guide to how prices have fared in the last year.
Unfortunately, the street inflation rate may have not been captured in the average increase in headline consumers’ price index.
Food items and goods needed by households in various economic classes have jumped significantly than what Nigeria’s inflation figure theoretically captured.
Apparently, there is no goods or services in Nigeria that has increased at such a conservative figure of 17.01% in the last 1-year.
That begs a question for policymakers to answer. Who is this figure meant for? Obviously, the core users include the monetary policy authority, the fixed income market investors, financial institutions and the likes.
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CBN will use it to set benchmark interest rates. In a country where personal leverage is close to impossible, a low-interest environment is a theory for the financial market setting – not for Nigerians on the street.
Is Headline Inflation Rate figure for All Nigerians?
