Yemi Kale: New petrol pump price may push inflation to 30% in June

Yemi Kale, partner and chief economist at KPMG Nigeria, says the new prices of premium motor spirit (PMS), also known as petrol, may add about 6 percent to Nigeria’s inflation rate.

The consumer price index (CPI), which measures the rate of change in prices of goods and services, climbed to 22.22 percent in April 2023 — the fourth consecutive surge in Nigeria’s inflation figure since the year started.

Analysing the implications of the new petrol price on the country’s inflation figure, Kale said the inflation rate may increase to 30 percent in June 2023.

However, the former statistician-general of the National Bureau of Statistics (NBS) said the CPI for May would not be impacted.

“Using the NBS CPI model+my macro model, the new PMS prices may add about 6 percent to CPI in June over whatever is reported in May, holding other things constant,” he tweeted.

“April was 22.22 percent and May is unknown and won’t be affected. So, June will be somewhere about 30 percent. Not as bad as I expected.”

Using the NBS CPI model+my macro model, the new PMS prices may add about 6% to CPI in June over whatever is reported in May, holding other things constant. April was 22.22% & May is unknown & won’t be affected. So June will be somewhere about 30%. Not as bad as I expected.

Advertisement

— Dr Yemi Kale (@sgyemikale) June 2, 2023

In his inaugural speech on May 29, President Bola Tinubu declared that the petrol subsidy payments had stopped.

The president’s statement shook up the country, forcing his media team to later clarify that the implementation of the policy would commence in the present month.

Still, the Nigerian National Petroleum Company (NNPC) Limited adjusted the pump price of petrol across its retail outlets — a situation typical of a subsidy-free regime.

The national oil firm said the new pump price was in tandem with market realities.

Speaking on the situation, Mele Kyari, NNPC’s group chief executive officer (GCEO), on Thursday, said the removal of the petrol subsidy would promote competition and regulate consumption.

Meanwhile, TheCable had reported that the spike in the commodity’s price is sapping commuters of additional funds as transportation cost doubles.