Inflation rate increases to 34.19% in June
The Federation Account Allocation Committee (FAAC) has said it disbursed N2.19 trillion to Nigeria’s three tiers of government in the month of May 2024. The allocations included N390.41 billion for the Federal Government, N403.403 billion for state governments and N293.816 billion for the 774 local government areas of the country.
It also disclosed that oil-producing states received additional revenue of N120.450 billion as 13 percent derivation revenue, adding that the Federal Government earmarked N80.51 billion for collection costs.
The gross revenue included N1.233 trillion from statutory revenue, while Value Added Tax (VAT) generated N500.92 billion, a decrease of N48.778 billion from the previous month.
After deducting collection costs and transfers, N466.46 billion VAT revenue was shared among the three tiers of government with the Federal Government receiving N390.41 billion, states receiving N493.40 billion and local governments receiving N293.82 billion.
Responding to the development, the Centre for the Study of the Economies of Africa (CSEA), maintained that the increase in revenue shared among the three tiers of government was due to an increment in oil and gas royalties, companies’ income tax (CIT), excise duties, petroleum profit tax (PPT) and customs external tariffs.
It said the increase in revenue presents an opportunity to improve public services like education and healthcare, reduce public debt and stimulate the economy through targeted investments.
To maximize the benefits amid protests against economic hardship across the country, CSEA urged the government to prioritize key sectors like agriculture and infrastructure development, ensuring transparent spending and avoiding fund misuse, thereby bolstering economic activities and reducing economic hardship.
Meanwhile, the National Bureau of Statistics (NBS) CPI report, indicates that headline inflation in June rose to 34.19 percent from 33.95 percent recorded in May, representing a 2.31 percentage point month-on-month change (MoM).
Read also: Lawyers strategize for blue economy, hail Akwa Ibom govt plans to develop Ibom Deepsea project.
Year-on-year (YoY), headline inflation rose by 11.4 percentage points, up from 22.79 percent recorded in June 2023, just as urban inflation rose to 36.55 percent, while rural inflation rose to 32.09 percent.
Furthermore, the food inflation rate rose to 40.87 percent. An increase in the prices of Garri, Millet, Yam Tuber, Palm Oil and items from the fish class drove the year-on-year rise in food inflation.
In terms of all-time inflation, Bauchi, Kogi and Oyo had the highest inflation rate of 43.95 percent, 39.91 percent and 39.15 percent, while Borno, Benue and Katsina had the lowest inflation rate of 25.90 percent, 27.52 percent and 29.21 percent respectively.
The continued inflationary pressure risks pushing the country into more economic hardship as more people become poor, dampening economic activities as businesses face difficulties making appropriate investment plans due to the unpredictable changing prices. Furthermore, if the inflation rate is unchecked, it is likely to fuel social unrest and increase insecurity.
As inflation continues to rise with increasingly tight monetary policies, the government should prioritize fiscal discipline, cutting down unnecessary expenditures, prioritizing investments that would boost domestic agricultural productivity and tackling supply chain bottlenecks in food production.
Security in farm areas needs to be strengthened to encourage farmers to return to the farmland. Otherwise, food inflation will persist, resulting in food insecurity, malnutrition and stunted growth.
