Electricity Tariff and Fuel Scarcity Push Inflation to 15.81% says Meristem

Electricity Tariff and Fuel Scarcity Push Inflation to 15.81% says Meristem

Inflation in Nigeria is expected to reach 15.81 percent in February 2022, according to Meristem analysts.

The data is likely to be released on Tuesday, March 15, by the National Bureau of Statistics (NBS), and the rise in inflation is expected to be affected by fuel scarcity and an increase in power tariff, according to the research.

Too much money chasing few goods as we commonly say inflation means has been on the rise for the last few months in Nigeria.

As a result of the introduction of contaminated fuel into the country last month, the country experienced another scarcity of premium motor spirit (PMS), also known as gasoline.

This development disrupted the supply chain, which, combined with Russia's ongoing war in Ukraine, has resulted in a fuel scarcity in Europe.

"The present gasoline scarcity gives us reasons to expect a surge in headline inflation in February," Meristem said in its research.

"The effectively increased PMS prices, as well as the associated increase in transportation costs, should be a big catalyst for core inflation."

"On the other hand, given Nigeria's large consumption of wheat and wheat-based items, we expect imported inflation to reflect more on food prices in the month," it added (the tension in Europe has caused an increase in the price of cereals and grains).

"The biggest risk factors for core inflation in February, according to our judgment, are an increase in power tariffs and rising crude oil costs." On this basis, we forecast headline inflation of 15.81 percent YoY in February 2022."

According to the Business Post, the statistics office said that inflation grew by 15.60 percent in January 2022, but the clog in the wheel of global economic growth created by the Russia-Ukraine situation is giving many people sleepless nights.

As a result of the tensions, Russia has been hit with harsh economic penalties, which might cause the country's economy to plummet by double digits.

The crisis' immediate impact may be observed in commodities prices, particularly in crude oil and wheat, where Russian supply to global markets is important.