 Welcome back to the breakfast and plus TV Africa. We're looking at a second conversation as the issue of inflation for Nigeria Nigeria's inflation rate changed direction in February as it rose to fifteen point seven zero percent from fifteen point six percent Recorded in the previous month and this represents a zero point one percent point increase Compete to the rate recorded in January 2022 This is according to the consumer price index report released by the National Bureau of Statistics MBS the consumer price index rose by fifteen point seven zero percent on Year-on-year-on from three hundred and sixty six point eight index points recorded in February twenty-twenty one two four hundred and twenty four point four points in February twenty-twenty two on Mountain Mont Basis the headline index increased to one point six three percent in February twenty-twenty two Which is zero point one six percent rate higher than the rate recorded in January twenty-twenty two That's one point four Seven percent the urban inflation rate increased to sixteen point twenty-five percent Which is part of the highlight that's in February twenty-twenty two from seventeen point ninety percent recorded in February Twenty-twenty one while the rural inflation rate increased to fifteen point one eight percent in February twenty-twenty two from sixteen point seven seven percent in February Twenty-twenty one now coinflation also rose to its highest level over four years at four ten point zero one percent while food inflation dropped to seventeen point a One one percent in the review period from seventeen point one thirty percent recorded in January twenty-twenty two The question is what does this mean to Nigerians and her economy? We do have a guest joining the conversation Kenny fair is a Developmental economists and lead consultant to Echo was commissioned Kenny fair is good to have you join us this morning So the question with all of the statistics that we see sounds very technical and Common Nigerian might just be or an average Nigerian might just be grappling With those statistics and trying to understand how this affects them and their business and what this means for the Nigerian economy Can you please tell us what all of this mean for the Nigerian economy? fifteen point seven zero percent Not the the there are five components of some inflation figures We have the the CPI which is the average composite price index you call that headline inflation That's the figure that keeps banded all over the world then you have the Coinflation now the coinflation is all in this is minus food sub-basket index Now that's a very important index because it tells you the status of the general rise of all Consumers is across the spectrum Now food sub-basket index is the third one and that has been the principal that has been driving our inflation figures So we all got concerned when in December it went up It went up and the reason was because of the consumption of food during the Christmas and people consume more than the average So you had a small uptick But as soon as that was over it came down in January and then in February We had a different reason other than food for it to rise and I'm come to that in a minute Now the fourth and fifth one are the urban inflation sub-index and the rural inflation sub-index They all tend to indicate what is going on in the rural area and in the urban areas And where is the theater of inflation now? What has happened in in January? was that there was no longer the pressure on food. So the inflation came down So if you look at the food sub-index, it was coming down and it's still coming down But we would have had a bigger drop in inflation But for the petrol what happened in petrol last month The the adulterated petrol that was brought in now costs massive cues Which is still going on all over the country and that cue means that the traders And then the transporters are having to pay more for fuel Ways more time with buying fuel buying fuel on the road at a higher much higher cost Dogwood across and then that has not only an effect if you look at the inflation figures That is the actual items you see that the price of the fuel solid fuel gas Everything connected to for their price went up significantly And then the knock on effect was that the price of transportation had to go up The food that was carried by transportation was also somewhat affected the one that I marketed it So everything that depends even power everything that depended on electricity my gas electricity tried all of them went up Then you just have fundamental that the true issue has been and you know what happens in Nigeria When there's a small thing it is exist. You know, you have a multiplier effect So what we have seen the opti-optic you saw now is purely because of the impact of the petrol Shenanigan that is the that is the only reason All other factors have been kept constant. So the general price you saw is just because of that petrol If you look at the food sub-patterning that which has been driving inflation for the last two three years That is still going down the figure is only is also gone down All other indices went up and they all went up because the derivatives of petrol and whatever petrol affects has gone out They've responded. I mean, so with the fact that we're having that you know inflation rate if you look at the headlines That's what it's saying. It's increased to 15 point seven zero percent What does that mean to an average Nigerian? No, see, let me explain. There are two things, you know when we say inflation figures We actually use Current figure against the last 12 months Figure so that is what we generally use the moment you come into month month for month It gets very confusing because you may have an increase on month to month and then you have a decrease in month to month Whereas you actually what I'm measuring is what happened 12 months ago So I try to keep away you confuse everybody the moment you go on month on month You just confuse everybody because whatever happens month to month doesn't still affect the trend The trend is is based on what happened 12 months ago. So that's why I don't get it Yeah, so the question here is if one sees that inflation has increased doesn't mean that the people have less power to purchase What does that really mean? That's the question Where the inflation increase in increase in inflation Shows that people are having to pay more for the same thing that they would have Purchase with their money. So the purchasing power of their money has gone lower has gone down So that's what it means if you were able to buy if the inflation is 15 has gone up And I was buying basket of tomato 1004 last month and maybe buying it 1005 this month is still the same basket of tomato So I'm paying more for the same good. And so the money that I have is purchasing less and this is going down, you know in relative value Thank you, doctor. Um You've talked about the the impact on of the, you know, a fuel scarcity or the the rising in You know in fuel cost the petrol situation Nigeria has been a factor in the increase in this A consumer price index the national bureau statistics in that report The cpi report released yesterday talked about What it termed the surge in energy prices. So they agree with you but apart from the scarcity and the petrol situation in Nigeria They also Fingering the ongoing crisis between Russia and Ukraine. Do do you submit to this this this without the doubt Without a doubt because what has happened is that the Brent crude, which is our own oil crude has gone up It has gone to $130 per barrel and it goes up and down. Of course every day it goes up and down So that that tells you that the base price for the crude is gone up now that would also translate to a higher price for the PMS itself because in the end of the day the PMS the crude is bought at that high cost of of a crude And then sent away you add the transportation cost and the increased transportation cost and they refine it abroad You increase the cost of refining you bring me back increase the cost of transportation and the pump price is going to go up Just because the money the the crude price is going up our pump price will be going up The only way to get rid of this is to take refineries to start sending us fuel And then and then also for modular refineries to kick in or the government refineries to start so that at least we can get rid of The cost of transportation and then having to pay somebody else somewhere else to refine this crude for us And then they will load their matching on on it That's the only way otherwise we are going to continue Yes, but to be so you talked about of course the headline inflation It talks about core inflation. He talked about the food basket And you've also rightly pointed out that the food sub index has been going down And that that is that is a bit surprising and strange sort of a paradox You know if you want to use that word, why is that so? Why is the food sub index going down despite the surge in annual prices? Isn't that a paradox as far as you know is the aggregate that is going down If because don't forget that the increase in transportation costs would have pushed up the foods of price Of the price of food the increase in energy cost and processing of the food would have pushed up the price of food But what has happened is that yes, it would have pushed it up But the momentum to go down was much much higher than the increase Occasioned by those for the related Travel things So it could have we have could have had more drop in the food sub-basket index Had we not had this another was if I was to guess We probably would have had 15 percent inflation if we didn't have this petroleum spike because the the momentum of food Coming down was very very high. Remember that we had the rice pyramid These rice have all been sent out to be milled by by millers and then pushed into the into the system And a lot of harvest going on right now We would have had a greater impact on food reduction food price reduction, but for this petroleum business But let's look at the fact that I mean it feels like, you know, seven consecutive years We've been looking at almost a double digit of talking about inflation and That's really not good for the country. But what are your thoughts on that? Seven consecutive years double digits Well, we entered the seven years in double digits and we're probably going to leave it in Still in double digits, although there are predictions that will hit a single digit by 2025 But but we it remains to be said if we continue to import crude and then do all these What do you call it this subsidy and there's no chance that we're going to meet that that figure But be it as it may the question is How do I feel about seven years of continuing to be in double digits? And my answer is that I really can see an end in sight With everything that can be done on food is being done By the money that is being poured into the food production system by the central bank And uh, and everybody knows that But in terms of what other players have to up their game You know, we want to subsidy removed Three trillion error is going to be an actual burrowing To be able to meet this this subsidy going on but don't forget that this is what you are being told You don't know what the real Subsidy is But that's what you're being told So there is a lot more if if if three trillion enters into development calculus He would reduce inflation. He will create more food. It will attack every sector that is putting pressure on inflation Finally before you go just a very quick one Let's look at the situation in Nigeria in the light of what's happening around the world What's the global mood and the global reality, you know, looking countries in the west, you know, the north and the hemisphere, you know, the europe, uk The north america, what are they going through? Are they also experiencing something similar because we've seen gas prices rise in the uk even in the us and canada us where they sell in gallows and canada they sell in liters. We've seen gas prices go up as well Now everybody's experiencing increases in prices for different reasons Nigeria is experiencing it for two reasons one the global rising price of crude And then also what was going on on the adaptation of our of our fuel and then the impact on the exaggerated impact on the food stock on the supply systems But generally globally we are going to be in for a sharp rise in the price of crude and gas because the crisis involving russia Second largest producer of Petroleum products and and also of gas supplying nearly 40 percent of the gas consumed by europe So the the fact that they are likely to shut down supply to europe means that there's more panic Around the world for them to replace that those those supply All right. All right. So there are many more things going to happen. This just unraveling Many more is going to happen across the whole sectors other sectors. So this is not just a Nigerian issue. This is a global problem Thank you very much. It is it is a global Nigeria's factor enters to exacerbate it without a doubt All right It's really through having you join us on the program this morning and always a pleasure listening to your analysis Dr. Candy fair is a developed economist and of course Consultant with the echo as commissioned. Thank you for your time, sir Thank you Well, there's a size of the conversation right here looking at nitrous inflation We just fingers crossed of course and we're hoping that relevant quarters were stepping and ensure that everything You know returns so normal And if you miss out on any part of the conversation, it's all right to follow us on facebook Twitter and instagram and subscribe to youtube channel as a plus tv africa and plus tv africa lifestyle I am missy before thanks for watching And i've go for you but tells we turn tomorrow in more keep watching plus tv africa and have a fantastic day