Nigeria’s import inflation threat heightens as US inflation hits record high of 8.5%
With volume of US imports to Nigeria increasing from $1.48 billion in 2020 to over $4.48 billion in 2021 and inflation figures in the United States spiralling way above its official benchmark, Nigeria is set to witness significant spillover effect through imported inflation.
In December 2021, Nigeria’s top imports from the United States included Cars ($14.5b), Telephones ($13.5b), Crude Petroleum ($13b), Commodities not elsewhere specified ($11.4b), and Computers ($10.9b).
Data released by the US Bureau of Labor Statistics on Tuesday revealed that consumer price growth surpassed 8 per cent in March, rising at its fastest pace since 1981 following a surge in energy and food prices exacerbated by Russia’s war on Ukraine.
The monthly rise registered at 1.2 percent, represents the fastest jump since 2005 and a sharp acceleration from the 0.8 percent increase recorded in February.
Interestingly, the data for the first time included the economic impact of Russia’s invasion of Ukraine, which has clouded the global outlook and sparked concerns about slowing growth coupled with even more elevated price pressures.
“Russia is one of the world’s largest energy exporters, and a significant percent of global inflation this year would be attributed to the war,” Moses Ojo, a Lagos based economist told Businessday.
The report further indicated that the figures underscored the impact of volatile commodity prices, with a jump in petrol accounting for more than half of the overall increase in March’s CPI.
The report partly read, “The all items less food and energy index rose 6.5 percent, the largest 12-month change since the period ending August 1982.
“The energy index rose 32.0 percent over the last year, and the food index increased 8.8 percent, the largest 12-month increase since the period ending May 1981.“
As a result of the recently released report, the Fed is now poised to raise interest rates by half a percentage point at its next policy meeting in May, almost double the pace of its March rate rise, as it seeks to lift its benchmark policy rate to a more ‘neutral’ level that neither aids nor constrains growth by year end.
With inflation hitting record highs in major Nigerian import partner countries, the likelihood is going to be evidence of trickle down effects which might heighten the country’s inflationary pressures over the next couple of months.
“With consumer prices rising astronomically in the US and our import affiliation with them, Nigeria is definitely going to witness imported inflation in the near to medium term,” Ojo said.