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Tag: Inflation

  • Inflation hits seven-month high at 11.44%

    The consumer price index (CPI) which measures inflation, increased by 11.44 per cent (year-on-year) in December 2018; a 0.16 per cent increase from the 11.28 per cent recorded in November.

    According to the December 2018 CPI/Inflation report released by the National Bureau of Statistics (NBS) released yesterday, all the divisions that contribute to the headline index increased.

    This is the first time in seven months that inflation would reach such levels. The last time the index was this high was in May 2018 when it was 11.66 per cent.

    The CPI measures the average change over time in prices of goods and services consumed by people for day-to-day living.

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    “The urban inflation rate increased by 11.73 per cent (year-on-year) in December 2018 from 11.61 per cent recorded in November 2018, while the rural inflation rate increased by 11.18 per cent in December 2018 from 10.99 per cent in November 2018.

    “On a month-on-month basis, the urban index rose by 0.76 per cent in December 2018, down by 0.07 from 0.83 per cent recorded in November 2018, while the rural index also rose by 0.72 per cent in December 2018, down by 0.06 percent from the rate recorded in November 2018 (0.78) per cent,” the report read.

    For the states, Bayelsa, Zamfara and Ekiti recorded the highest inflation rate while Cross River, Ogun and Kwara recorded the lowest increase in prices.

    Food inflation was also highest in Abuja and Nasarawa while Ogun, Cross River and Oyo states.

  • Inflation hits seven-month high at 11.44%

    The consumer price index (CPI) which measures inflation, increased by 11.44 per cent (year-on-year) in December 2018; a 0.16 per cent increase from the 11.28 per cent recorded in November.

    According to the December 2018 CPI/Inflation report released by the National Bureau of Statistics (NBS) released yesterday, all the divisions that contribute to the headline index increased.

    This is the first time in seven months that inflation would reach such levels. The last time the index was this high was in May 2018 when it was 11.66 per cent.

    The CPI measures the average change over time in prices of goods and services consumed by people for day-to-day living

    “The urban inflation rate increased by 11.73 per cent (year-on-year) in December 2018 from 11.61 per cent recorded in November 2018, while the rural inflation rate increased by 11.18 per cent in December 2018 from 10.99 per cent in November 2018.

    “On a month-on-month basis, the urban index rose by 0.76 per cent in December 2018, down by 0.07 from 0.83 per cent recorded in November 2018, while the rural index also rose by 0.72 per cent in December 2018, down by 0.06 percent from the rate recorded in November 2018 (0.78) per cent,” the report read.

    For the states, Bayelsa, Zamfara and Ekiti recorded the highest inflation rate while Cross River, Ogun and Kwara recorded the lowest increase in prices.

    Food inflation was also highest in Abuja and Nasarawa while Ogun, Cross River and Oyo states.

  • MPC members seek end to rising domestic liquidity, inflation

    Monetary Policy Committee (MPC) members’ notes released by the Central Bank of Nigeria (CBN) at the weekend urge the regulator to urgently tackle rising domestic liquidity and inflation, writes COLLINS NWEZE.

    Rising domestic liquidity and inflation have continued to constitute major setback for the economy as the 2019 approaches.

    The economy is also expected to face slowing global demand and growth projections, volatile oil prices, and sustained monetary policy normalisation in the United States, which all have implications for exchange rate stability and by extension, price and monetary stability.

    In addition, the upcoming general elections and unintended but largely contractionary fiscal environment due to the delays in passing national budgets, also have implications for sustained economic recovery and growth.

    These challenges are some of the considerations that bothered the members of the Central Bank of Nigeria (CBN)-led Monetary policy Committee (MPC) who have voiced their concerns over certain economic indicators for Nigeria.

    At the last MPC meeting,  CBN Deputy Governor Edward Lametek, said  after two consecutive mild increases, headline inflation slowed, albeit weakly, in October 2018, reflecting a slight moderation in food inflation. The decline in food inflation more than compensated for the marginal increase in core inflation to produce the observed decline in the headline inflation.

    He said despite the decline, the underlying threats to consumer price stability have remained active, giving fillip to a hazy medium-term outlook for inflation.

    “The sources of this outlook include uncertainties around the path of fiscal policy and liquidity on the domestic front; and risks to external reserves accretion and exchange rate, coming from the global economic environment,” he said.

    According to him, although the naira has fared better than most (other) currencies, the capital market has not been as resilient.

    Continuing, he said the signals from the global environment with the country-specific vulnerabilities and the outlook for key economic concerns meant that the risks to price stability and economic growth have remained balanced.

    “First, it is important to note that at 11.26 per cent, we cannot assume that inflation pressures have fully receded. The outlook does not offer any such assurance. On the contrary, the expected increase in private spending due to year-end festivities and the forthcoming general elections combining with the more aggressive implementation of the capital side of the budget for 2018 as well as payment in-part of the debt owed to contractors by Government could rapidly expand domestic liquidity.

    ‘’Though marginal, the increase in core inflation in October, being the first since November 2017, leaves no one in doubt about what could happen in the short- to medium-term if proactive steps are not taken to rein-in domestic liquidity,” Lametek said.

    Continuing, he said the challenge for economic policy on the side of economic activity is not by any means lighter. “In second quarter of 2018, the growth (recovery) momentum slowed as oil output contracted and importantly, contribution from agriculture slowed. The economy appears to be risking a low-growth trap which must be averted. Meanwhile, the fiscal levers needed to mitigate this risk do not seem to be readily available. Given the already high public debt, low revenue and buffers as well as rising yields, the scope for using fiscal policy to sufficiently push growth is narrowing. In effect, monetary policy could continue to be overburdened,” he said.

    Among others, improving domestic credit continues to be a key imperative towards growing the economy and creating jobs. In addition to the real sector interventions by the bank, the current state of economic activity demands a marked improvement in commercial bank credit to shore up private investment.

    A resilient banking system is needed to ensure this. And so, it is heartwarming that key financial soundness indicators (FSIs) of the banking industry improved in October 2018 – industry capital adequacy rose, while Non-Performing Loans (NPLs) moderated, amongst others. Sustaining these improvements remains a key imperative for policy and partly argues for a non-hawkish approach to monetary policy at this time even though inflation remains a concern.

    Lametek said that monetary policy cannot mitigate all of the current risks to economic stability. It can only complement sector policies and mostly crucially, fiscal policy.

    “Given the indications coming from oil prices especially and the potential ramifications of a prolonged low crude prices for the entire economy, all macroeconomic policy levers will need to be engaged at this time to forestall a low growth trap. In voting for a hold, I have factored its various implications including, quite importantly, continuation of monetary sterilisation and other administrative measures and innovations like the real sector interventions and the provision of access to part of the cash reserves requirement (CRR) for targeted credit to specific sectors of the economy by deposit money banks (DMBs),” he stated.

    Another MPC member, Festus Adenikinju, said the report on the banking system’s stability shows some improvements across major financial soundness indicators, like the capital adequacy ratio, liquidity ratio, returns on equity and assets as well as the non- performing loans (NPLs) ratios. This is an indication that the measures taken by the bank have started to yield some positive results.

    “I am also pleased about additional measures being considered by the bank to ensure the continuous soundness of the banking and financial sector. This is critical to address the incidence of NPLs, improve credit flow to the economy and perhaps more importantly, boost confidence of the banking public on the overall soundness of the financial sector. The bank cannot afford to shift its attention away from effective monitoring of the operations and conduct of the banking sector,” he said.

    CBN Deputy Governor, Financial System Stability, Aishah Ahmad, said global economic activities in 2018 commenced on a broadly optimistic note.

    She explained that the strong headwinds which confronted the global economy in 2017 moderated, giving way to prospects for stronger growth in the outgoing year.

    “Halfway into the year, however, downside risks to global growth became more evident- faster pace of the US policy normalisation, a developing global trade war, rising public debts and increasing financial vulnerabilities, emerging markets’ capital reversals and volatile crude oil prices. These developments resulted – as anticipated in my July personal statement – in tempered optimism and a downward review of global growth projections by the International Monetary Fund (IMF) to 3.7 percent from its earlier projection of 3.9 percent.

    “These emerging risks had mixed impact on emerging market economies ranging from currency depreciations to slowing growth and rising price levels,” she stated.

    Ahmad said the CBN’s sustained tight monetary policy stance, and other initiatives aimed at stabilising the exchange rate and maintaining confidence of foreign investors, which have been widely commended, tempered the effect of these shocks.

    In addition, tailwinds, most significantly, high crude oil prices, averaging about $70 per barrel (p/b) for most of the year, also helped strengthen prospects for fiscal consolidation and build strong external reserve buffers.

  • Nigeria records first inflation rise of 2018

    After eighteen consecutive months of consecutive disinflation, Nigeria’s inflation rate has rose to 11.23% in August, largely due to increasing food prices, the National Bureau of Statistics (NBS) has said.

    In its latest report titled ‘CPI and Inflation Report August 2018 ’ which was released in Abuja on Friday, the NBS stated that the rise is 0.09 % points higher than the rate 11.14 % recorded in July, 2018 and represents the first year-on-year rise in headline inflation.

    “The consumer price index, (CPI) which measures inflation increased by 11.23 percent (year-on-year) in August 2018.

    “This is 0.09 percent points higher than the rate recorded in July 2018 (11.14) percent and represents the first year on year rise in headline inflation following eighteenth consecutive disinflation in headline inflation.

    “The composite food index rose by 13.16 percent in August 2018 compared to 12.85 percent in July 2018.

    “The ‘’All items less farm produce’’ or Core inflation, which excludes the prices of volatile agricultural produce stood at 10.0 percent in August 2018, down by 0.2 percent from the rate recorded in July 2018 (10.2) percent,” it stated.

    The NBS further explained the relatively higher rise in urban inflation.

    “The urban inflation rate increased by 11.67 percent (year-on-year) in August 2018 from 11.66 percent recorded in July 2018, while the rural inflation rate increased by 10.84 percent in August 2018 from 10.83 percent in July 2018.

    “On a month-on-month basis, the urban index rose by 1.00 percent in August 2018, down by 0.23 from 1.23 percent recorded in July, while the rural index also rose by 0.96 percent in August 2018, down by 0.22 percent from the rate recorded in July 2018 (1.18) percent

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    “The corresponding twelve-month year-on-year average percentage change for the urban index is 13.95 percent in August 2018. This is less than 14.33 percent reported in July 2018, while the corresponding rural inflation rate in August 2018 is 13.21 percent compared to 13.64 percent recorded in July 2018,” the NBS stated.

    “If we could read the secret history of our enemies, we should find in each man’s life, sorrow and suffering enough to disarm all hostility.”

  • ‘Fed Govt must tame spiralling inflation’

    Though inflation rate has continued to drop in the past 14 months, it is still high at 11.14 per cent. Institute of Chartered Accountants of Nigeria (ICAN) President Razak Jaiyeola believes the government must work harder to tame it. He told Charles Okonji in Lagos that members of the institute working in organisations which do not remit workers’tax are now obliged to report to the Inland Revenue.

    What is your take on accounting regulation in Nigeria?

    The Institute of Chartered Accountants of Nigeria (ICAN) came into being by the Act of Parliament in 1965. We are empowered by that Act to regulate the standard of accountants in the country. So, that is how we started establishing standards for the regulation of accounting. For this reason, we introduced a syllabus which we review from time to time. We also embarked on regular training for accountants, and we call it Mandatory Continuing Professional Education (MCPE). We recently reviewed the Code of Ethics of members whereby they are expected to comply with a law that mandates members to disclose any organisation where they are working or where they are acting as external or internal auditors cutting corners to relevant authorities.

    We have introduced whistle blowers policy for them to alert the relevant authorities about the shortfalls of those organisations that are not living up to their responsibilities, and the institute will support them, when they run into trouble. Members of our institute came together to form the International Federation of Accountants (IFAC), which today consist of three million chartered accountants all over the world, and we have representation in such body. We have over 45,000 accountants in Nigeria, and over 150,000 students. We also have about 20,000 accounting technicians, which are also called junior accountants, and they have over 250,000 students.

    What is your position on strict enforcement of standards in the accounting profession?

    We have Professional Practice Monitoring Committee, which the council has set up. Members of the committee pay monitoring visits to organisations and they write reports to council to tell us how the members are faring in the professional practice. They go there with the programme of what to look for, standard of employees, the type of working programmes they are using, the kind of training the staff are subjected to, because there is minimum requirement for every member, every year. Mandatorily, it is expected to preserve credit hours. We also look at the ethical standards. Recently, the institute bought into “NUCLAR” programme, which encourages our members to disclose any un-ethical behaviour by some organisations. For instance, if an organisation defaults in paying or remitting deductions from employees salary to the appropriate authorities over time, the accountant in such organisation is expected to report to such management that it is against government regulations. If they don’t do the right thing after the caution by remitting the deductions from employees’ salaries into government account, then our member would report to the relevant government authorities about such happenings, and make a report to them. But it is the business of relevant government authorities to take up the case. For instance, it is the business of Lagos State tax office to charge any of the defaulting companies within Lagos to court for prosecution.

    Do you prosecute erring members? If yes, how many have you prosecuted recently?

    As regard ethical behaviour, any of our member that is found wanting in whatever form, we expect the public to make a report to us. First, we would arraign such member to face an investigation panel, which will subject the member to interrogation, and when found guilty, would be taken to the tribunal, thereafter, appropriate measures would be taken against such a person. So, our members know that they are not free to behave anyhow. That is the way that we enforce standards in the profession. Every year, we always have cases that we treat and once a judgement is given, it is published on the dailies. They have not been too many of recent, because our members know that the tribunal is up and doing. At the tribunal, we ensure that we are very fair to all, without perversion of justice.

    Are you satisfied with the managment of the economy, especially its debt management strategy?

    First, the country must curtail its appetite for imported goods, diversify revenue sources, revive Ajaokuta Steel Mill, and tighten security measures, while the ease of doing business project must be continued with vigour. In every budget, the government sets aside a certain amount to repay what it owes. Today, what the country earn is not enough to service recurrent expenditure, capital expenditure, and to pay debt. So, we are running at deficit. If we take a look at our infrastructural deficit, we find out that it is huge. At the moment, the government spends about 30 per cent of its revenue to service debt. It is not an easy thing to do.  So, for the government to take us out of this problem, firstly, there are lots of assets lying idle all over the places. What exactly is Dodan Barracks doing at Ikoyi, a prime location? Look at the barracks in Maryland, the Ikoyi Prison, and the Federal Government Secretariat, all at prime locations, lying idle and wasting. They should sell them off, move the barracks away from prime locations. This is not done anywhere in the world, that the government would just be tying down resources. We have a lot of money in the economy that is wasting and we are talking about diversifying the economy. Look at Ajaokuta Steel Mill idling away. All these assets are the things that we should pay attention to. We have the Economic Recovery Growth Plan (ERGP) document which we should implement it faithfully. What about the ease of doing business? We still have a lot to learn and to improve on. Diversifying into agric means that we are diversifying our sources of revenue, we have been diversifying for years, but are they effective? We should be thinking of diversifying our sources of revenue to bring in forex, which is very important. A lot of us will say that Nigeria is very rich in oil. Look at the volume of oil we generate compared to Saudi Arabia, so we cannot say we are rich.

    The rate at which Nigeria population is growing is alarming. Around 1960, Nigeria’s population was 42 million, and UK’s population was 56 million, but by 2015, UK was 62 million and Nigeria is over 180 million, and by 2070, Nigeria would be about 550 million, and UK would still be under 80 million. What is mind boggling is that Nigeria’s population is growing at five million per annum and we are not doing anything about it. The problem is that now, we have over 180 million people sharing the amount of resources or revenue we shared 10 years ago. So, these are issues that we should confront squarely as a nation. We have to control inflation, we have to control price, and we have to manage our oil production. These are key areas that we should seriously looked into. As an institute, we are having stakeholders’ forum, where we would tackle the issue of corporate governance, we will tackle issues of tax policy of this country, how we can make contributions to the government. In the next stakeholder’s forum, we are going to handle the economy; we are going to tackle the global economic outlook, the regional, and the cyclical changes that take place. We are going to create awareness within our members, to drive home to them the indicators that are guiding this economy. We would pay a visit to the President, and the Minister of Finance along with all other stakeholders. We are developing a stakeholder’s package, such that within the next few months, you will see our institute coming frontally in advocacy, just like we used to have in those days.

    How would you describe the ongoing anti-graft war in the country?

    People believe, and I also believe till tomorrow that President Buhari is not a corrupt politician; he has tried using the instrumentality of the Economic and Financial Crimes Commission (EFCC), Indpendent Corrupt Practices and Other Offences Related Commission (ICPC), Directorate of State Security (DSS), Police and so on. But the level is far below our expectation. He tried to deal with the corrupt judges, though we didn’t record much success, but he has sent some signals that people should sit-up, and we have seen changes. Secondly, the introduction of special courts to try cases and to accelerate judgement is a good step in the right direction. He also tried to put in place, systems to avoid delays; he introduced a system for voluntary declaration of assets, and the government introduced some investigative techniques in order to get judgement. That is where the forensic department of ICAN would collaborate with government to ensure that we try as much as possible to give skills to the government agencies. We are going to train them on technology-assisted investigative skills to make sure that they are able to deliver on both the whistle blowing efforts of the government. There are other areas that are yielding dividends, the government should keep it up and make sure that they are very sustainable. The government should keep faith with the remuneration of people that blow whistle. With all these steps, we do hope that things would continue to take shape.

    Though the economy is said to be out of recession but not out of the woods, how did the country get into this mess?

    The real genesis of recession is our uncontrollable appetite for importation. The things that we cannot produce are what we like. When you look at our roads, what you see is Honda, Toyota, Nissan, Mercedes Benz, and all sorts of imported vehicles, and other items. Efforts by government to import Completely Knocked Down (CKD) vehicles are not intensified, except Innoson. What is the big deal? Look at our phones, everything is being imported. One of the most worrisome is the reckless import of apple. Look at rice. Today, rice import is no more, this is because there is a serious enforcement on rice policy, and in a few years from now, we would be earning forex on rice export. And that is the way to go. The government should diversify our economy into agric, solid minerals mining and value chain development, and into local sources of revenue.

    To what extent do your members in the financial institutions  use  local software?

    The issue of Local Content is very necessary to us, not only with respect to bankers, but to all technology consumers. The Nigerian Information Technology Development Agency (NITDA) is an agency of government that is supposed to enforce it, but we found out that those banks and government agencies, even the Central Bank of Nigeria (CBN) and other agencies of government prefer to use imported software. But thank God that the ‘Executive Order 5’ has addressed this problem, mandating that local technologies must be patronised and accorded preference. So, we expect the government to enforce Local Content. We have this local content in the oil and gas industry. There is the Nigeria Content Act and there is an arm of government that is enforcing the law in the industry.

    We are going to collaborate with the Institute of Software Practitioners of Nigeria (ISPON) to fight the violation of Local Content in the software use. This is an area that we are very much interested in, and by so doing, this will lead to creating more employments, and before you know it, we will start exporting software.

    What are your plans for ICAN?

    ICAN is carrying out an in-house upgrade of members that will usher in the dream accountants of tomorrow capable of competing anywhere in the world.

    ICAN is targeting at producing digital accountants in every sense of the word by making members embrace Information Technology (IT) and the opportunities that go with it. I see our members participating actively as world acclaimed digital accountants with the review of ICAN syllabus in this direction.

    Our intention is to see ICAN taking over the whole of Africa. There are lots of opportunities out there, and once we embrace IT. Within the next few weeks, we would be deploying tele-conference, and through that, we would be bringing down the cost of holding meetings such that people that have to travel from all over the places for the purpose of attending meetings would no longer do so. We are going to collaborate withAhmadu Bello University Business School. We would bring international speakers through the telecoms, thereby bringing the resources that were not ordinarily available. Capacities that are lying idle over there, and cutting-edge services

    I see our members practising with key accounting professional bodies in the world, we have signed agreement with England and Wales, and within the next few weeks, we will call all our members. We have reviewed our syllabus such that no other accounting professional body in the world would be a threat to us.

     

     

  • Nigeria inflation dips 18th time to 11.14%

    Nigerian inflation declined for the 18th consecutive time 11.23 per cent in June to 11.14 per cent in July, 1.28 per cent points below Federal Government’s projection.

    The Federal Government had in its 2018-2020 Medium Expenditure Framework and Fiscal Strategy projected inflation of 12.42 per cent for the period.

    In its latest report released yesterday in Abuja, the National Bureau of Statistics (NBS) indicated that the Consumer Price Index (CPI) which measures inflation declined by 0.09 per cent in July, 18th consecutive reduction in inflation since January 2017.

    The report showed that urban inflation rate reduced on a year-on-year basis to 11.66 per cent in July 2018 from 11.68 per cent recorded in June 2018, while the rural inflation rate remained flat at 10.83 per cent for the two months.

    On month-on-month basis, the headline index increased by 1.13 per cent in July 2018, down by 0.11 per cent points from 1.24 per cent recorded in June 2018; representing the first month on month headline inflation decline since February 2018.

    The report indicated that the percentage change in the average composite CPI for the 12-month period ending July 2018 over the average of the CPI for the previous 12-month period was 13.95 per cent, showing 0.42 per cent point from 14.37 per cent recorded in June 2018.

    The sustained improvement in inflation may pressure the Central Bank of Nigeria (CBN) to consider a cut in the benchmark interest rate. The apex bank has rebuffed clamour for reduction and sustained the Monetary Policy Rate (MPR) at 14 per cent, citing inflation and fragile macroeconomic environment.

    Many analysts expected the inflation to continue on the decline, although the possibility of the rate hitting the apex bank’s target of between six and nine per cent is slim.

  • CBN to stop naira slide, inflation with election spending monitoring

    With election spending looming and the late passage of the 2018 budget, the Central Bank of Nigeria (CBN) has vowed to monitor and control spending in the coming months to save the economy from the adverse consequences of expansionary fiscal measures.

    CBN Governor Godwin Emefiele told reporters at the end of the Monetary Policy Committee (MPC) meeting in Abuja: “We will be in control and monitor these activities and ensure that as these activities begin to unfold we, as monetary policy authority, will take action that will make sure that the adverse consequences that will arise from these expansionary activities will not impede our activities of bringing inflation down and achieve a stable exchange rate.”

    That is why the MPC decided to retain the Monetary Policy Rate (MPR) at 14%, the CBN boss said.

    The CBN Governor noted that “there are expansionary fiscal activities that we see, beginning from around May or June, this year; the fact that at this time we are still spending on 2017 budget; 2018 budget will hopefully kick in around June/July.  There will be an acceleration to the rate of spending and we also expect that there will be a lot of election spending.”

    According to Emefiele, the MPC was worried over the potential effects of expansionary fiscal budget of 2018 and the liquidity impact of rising FAAC distribution, following increase in the prices of crude oil as well as the build- up in election related spending towards the 2019 general elections.

    These, he said,  “expectedly, are meant to expand the economy and spur growth, which is commendable, but because price and monetary stability is our strong mandate, we do know that those expansionary fiscal measures will eventually lead to inflationary tendencies and, if that happens, may reverse the course of inflation upwards and put pressure on the foreign exchange market.”

    As a result of these  findings and scary scenarios, the MPC, Emefiele said, “strongly deliberated and thought there was a need to tighten in anticipation of the occurrence  of these expansionary activities”.

    On the Nigeria/China currency swap, the CBN Governor said the details of the framework would be released next week.

    As a first step, he said, “the settlement banks have been chosen; they will be Standard Chartered Bank, and Stanbic Bank that has its own affiliate bank ICBC that is the Investment and Commercial Bank of China that will be the correspondent at the Chinese end”.

    Emefiele assured Nigerians that the deal “can never be negative to Nigeria”. According to him, “how it works is that it will just operate the way normal Form M or LC (Letters of Credit) transactions happen”,

    “Under the China-Nigeria deal, what we are saying is that Form M or whatever name it will be called by the time the framework is released, we will begin to see that Chinese suppliers will begin, based on the negotiations with their Nigerian importers, to issue invoices in Reminbi and if you consider that China is Nigeria’s largest trading partner, controlling close to a market share of about 25%,  what that means is that all things being equal, by the time we conclude the framework, we should see invoices more in Reminbi rather than in the traditional dollar.”

    In Emefiele’s view, “it is going to be strongly positive for Nigerian imports and also for Nigerians; that is what we expect and we will ensure that we achieve that”.

    The CBN chief maintained that “this was a negotiation that was painstakingly drawn, and I am optimistic that Nigeria will reap a positive impact from this and we do expect that by the time the framework is released, that Nigeria will end up being the Reminbi trade hub in the West African sub-region” .

    His optimism  is based on the fact that “there are only three countries in Africa that are currently enjoying the swap deal between China and themselves (South Africa, Egypt and Nigeria); so, there is a lot of scope to go through it and for Nigeria to benefit from this arrangement and particularly not just in Nigeria but also West African sub-region.”

    Asked how the apex bank hopes to creatively boost credit to the real sector, the CBN governor said that one of the creative ways to encourage Deposit Money Banks (DMBs) to increase credit to the real sector of the economy, will be to “come up with some prudentials that will relate loan/deposit ratio with the level of cash reserve that a bank pools so as to direct a bank or compensate the bank that has done a lot of work in boosting its loan/deposit ratio through compensating them”.

    The compensation, he said, will come in the form of Cash Reserve Ratio (CRR) benefits to the DMB.

    “Those who prefer to keep liquidity and trade in government securities or direct those to the FX market rather than grant a loan to the real sector will be penalised,” he added.

    At the end of the MPC meeting, it was decided that MPR will be retained at 14 per cent, with one member voting for a reduction; CRR was also retained at 22.5 per cent and the liquidity ratio of 30 per cent; Asymmetric corridor at +200 and -500 basis points around the MPR.

    According to the meeting’s  communique, foreign reserve stood at $47.79 billion as at May 18, 2018.

    The MPC urged the CBN to sustain this momentum and continue to boost investor confidence in the economy.

    The Committee believes that growth remains largely fragile and could benefit from further reforms and stimulus.

    In this regard, the MPC urged the various levels of government to accelerate the settlement of contractors’ debts and salary arrears as well as facilitate the quick implementation of the 2018 Federal Government budget.

  • Inflation drops to 13.34 per cent

    Nigeria’s inflation rate measured by the Consumer Price Index (CPI) dropped from 14.33 in February to 13.34 per cent in March year-on-year, the National Bureau of Statistics (NBS) CPI report for March has shown.

    It stated in the CPI report released yesterday in Abuja that the figure showed 14 consecutive reductions in inflation rate since January 2017.

    However, in another survey report titled ‘Conflict In Nigeria And Food Insecurity In Conflict-Affected Areas’, the NBS noted that conflicts involving Boko Haram, herdsmen and pirates across the Northeast, Northcentral, and Southsouth between 2010-2017 significantly contributed to food insecurity.

    In its Consumer Price Index (CPI) and Inflation Report for March 2018, the NBS noted that for the 14th consecutive month of inflation slow-down which began in February 2017, Nigeria’s inflation rate dropped from 14.33 to 13.34 per cent.

    “The CPI which measures inflation increased by 13.34 per cent (year-on-year) in March 2018; this fourteenth consecutive disinflation since January 2017 is 0.99 per cent points less than the rate recorded in February 2018 (14.33) percent.

    “On a month-on-month basis, the Headline index increased by 0.84 per cent in March 2018, up by 0.05 perm cent points from the rate recorded in February.

    “The percentage change in the average composite CPI for the twelve month period ending March 2018 over the average of the CPI for the previous twelve month period was 15.60 percent, showing 0.33 percent point lower from 15.93 per cent recorded in February 2018.

    “The Urban inflation rate eased by 13.75 percent (year-on-year) in March 2018 from 14.76 percent recorded in February, while the Rural inflation rate also eased by 12.99 percent in March 2018 from 13.96 percent in February,” the report stated.

    The NBS report on inflation also covered all items and specific food prices in various states.

    “In March 2018, all items inflation on a year on year basis was highest in Bauchi (16.38 per cent), Kebbi (16.36 per cent) and Nasarawa (16.33 per cent), while Kwara (10.30 per cent),Kogi (10.87 per cent) and Delta (11.17 per cent) recorded the slowest rise in headline Year on Year inflation.

    “In March 2018, food inflation on a year on year basis was highest in Nasarawa (20.83per cent), Bayelsa (19.03per cent)and Yobe (18.93 per cent), while Kogi (11.99 per cent), Bauchi (12.60 per cent) and Benue (13.07 per cent) recorded the slowest rise in food inflation,” it added.

    In the NBS’ report on ‘Conflict In Nigeria And Food Insecurity In Conflict-Affected Areas’, the NBS’ survey indicates that the majority of households in the three geo-political zones surveyed recorded high degree of food insecurity.

    “Food insecurity as measured in the survey could be transitory; markets are the main source of food, and there is plenty of food available in the market.

    “However, high food prices are the largest concern in all three regions, which is in line with high (national) food inflation rates.

    “The relationship between household characteristics and food security vary regionally, but some patterns emerge: Larger households are more likely to be food insecure, more educated households more food secure,” NBS noted.

     

     

     

     

     

     

     

     

     

     

     

  • Inflation dips further to 14.3%

    Inflation slowed for a 13th consecutive month in February, but may still be too high for the Central Bank to start cutting rates from a record.

    Consumer-price growth in Africa’s most populous nation decelerated to 14.3 per cent from 15.1 per cent in January, the  National Bureau of Statistics (NBS) said in an emailed statement.

    The median estimate in a Bloomberg survey was 14.6 per cent. Prices rose 0.8 per cent in the month.

    The Central Bank of Nigeria (CBN) Governor Godwin Emefiele, said last month that the apex bank may reduce its benchmark from a record-high 14 per cent before July, if inflation drops closer to single digits. Price growth has exceeded the target range of six to nine per cent for 2 1/2 years partly due to increasing fuel and food costs, as well as a weaker currency that raised prices of imported goods.

    The cost of gasoline increased an average 15 per cent to N172.5 ($0.48) in February from a year earlier, according to NBS, which collects data including pump prices that are above the government’s official cap of N145 per liter.

    The Monetary Policy Committee (MPC) is scheduled to meet March 19-20 if at all, having missed its January gathering because it had insufficient members to form a quorum. That’s because lawmakers refused to confirm new members amid a political stalemate with President Muhammadu Buhari.

    The committee has kept the policy rate at 14 per cent since July 2016 as it tries to balance fighting inflation, propping up the naira, and supporting an economy that the International Monetary Fund (IMF) forecast will expand 2.1 per cent this year, strengthening a recovery after contracting in 2016.

  • Access Bank: inflation’ll contract to 15.02%

    Inflation rate (year-on-year) will contract to 15.02 per cent in February 2018 from 15.13 per cent recorded in January 2018, Economic Intelligence Group of Access Bank has shown in its latest forecast.

    The Group noted that National Bureau of Statistics (NBS) is scheduled to release the inflation figure for February 2018 on March 14, 2018, based on the Data Release Calendar available on the Bureau’s website.

    The Group, in an emailed report yesterday, said: “Our methodology adopts an autoregressive analysis of past prices, while it recognises all the assumptions used by the NBS in its computation of monthly composite consumer price index (CCPI).

    “Looking in more detail at the drivers, our analysis indicates that the continuing trend of slowing inflation rate in February reflects a drop in food prices and stability in the currency.

    “In February, prices of food and non-alcoholic beverages, the largest component in the consumption basket (with a weight of 51.8 per cent) fell slightly. Based on our survey, prices of food items notably Irish potatoes, tomatoes, and pepper ticked downwards in February.”

    It said February’s easing of price pressures also reflects stability in the core index which excludes farm products and energy prices, owing to ongoing consistent FX supply by the Central Bank of Nigeria (CBN) and the appreciation of the naira on the parallel market. The value of the Naira settled at N363/$ in the parallel market on February 28th compared to N364/$ a month earlier.

    The forecast also said February’s easing of price pressures also reflects stability in the core index which excludes farm products and energy prices, owing to ongoing consistent FX supply by the CBN and the appreciation of the naira on the parallel market. The value of the Naira settled at N363/$ in the parallel market on February 28th compared to N364/$ a month earlier.

    “While we believe the falling inflation rate will support looser monetary policy in the coming quarters, we nonetheless expect the CBN to adopt a relatively cautious stance when it comes to making rate cuts for fear of triggering any weakness in the local currency.

    “With no change in the benchmark rate anticipated, we expect the CBN to continue issuance of OMO (open market operation) and Stabilisation Securities with focus on curbing naira liquidity to manage USD demand.”