The International Monetary Fund (IMF), has revealed that Nigeria’s inflation may worsen any moment from now due to the rising cost of shipping into the country.
In a report titled, ‘How soaring shipping costs raise prices around the world,’ the Washington-based lender explained that shipping costs had soared as a result of the ongoing dispute between Russia and Ukraine. Hence, Nigeria’s inflation and those of other nations in the world may become unfavourable.
According to the Fund, the cost of shipping a container on the world’s transoceanic trade routes had increased seven-fold in the 18 months of the year.
The report read: “Our analysis predates the war in Ukraine but isn’t isolated from it: the conflict will likely exacerbate global inflation.
“Sea carries more than 80% of the world’s traded goods, most of which sail inside 40-foot-long steel containers stacked by the thousands atop some of the largest vessels ever built. The shock of the pandemic underscored just how crucial the maritime container trade is to the global economy.
“From Shanghai to Rotterdam to Los Angeles, the coronavirus upended supply chains. Ports lacked workers who were homesick. Truck drivers and ship crews couldn’t cross borders because of public health restrictions.
“Pent-up demand from huge stimulus programs during extended lockdowns overwhelmed the capacity of supply chains. Besides causing delays in getting goods to customers, the cost of getting them there surged.
“As the Chart of the Week shows, the result of those challenges was that the cost of shipping a container on the world’s transoceanic trade routes increased seven-fold in the 18 months following March 2020, while the cost of shipping bulk commodities spiked even more.
“Our new research shows that the inflationary impact of those higher costs is poised to keep building through the end of this year.”
IMF maintained that the increase in shipping costs observed in 2021 is likely to increase inflation by about 1.5% in 2022.
What you should know about Nigeria’s inflation
Nigeria’s inflation, which is the Consumers Price Index, rose to 15.7% in February from 15.6% in January 2022.
According to the National Bureau of Statistics (NBS), the highest increases were recorded in the prices of gas, liquid fuel, wine, tobacco, spirit, narcotics, solid fuels, among others.
