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Tag: Nigeria’s inflation

  • Food, fuel hike push inflation to 32.70%

    Food, fuel hike push inflation to 32.70%

    • How to tackle it, by CPPE

    Owing to the increase in the cost of food, electricity, fuel and other basket of goods, headline inflation rose from the 32.15 per cent in August 2024 to 32.70 per cent in September 2024, according to the National Bureau of Statistics (NBS).

    This was contained in a press statement endorsed by the Statistician-General of the Federation Saminu Adeniran issues yesterday.

    He said: “In September 2024, the headline inflation rate increased to 32.70per cent relative to the August 2024 headline inflation rate which stood at 32.15per cent.”

    Recall that the NBS said inflation declined from 34.19per cent in June 2024 to 33.19per cent in July 2024.

    Also yesterday, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, regretted that after a few months of deceleration, the inflation numbers had returned to a spiraling path.

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    He said tackling inflation required urgent government intervention to address the challenges inhibiting production, productivity and security in the economy. The real sector of the economy, he said, needs to be incentivised to reduce production costs.

    The NBS boss said looking at the movement, the September 2024 headline inflation rate rose by 0.55per cent compared to the August 2024 Headline inflation.

    He said similarly, on a year-on-year basis, the headline inflation rate was 5.98per cent points higher than the rate recorded in September 2023, which was 26.72per cent. This, he said, shows that the Headline inflation rate (year-on-year basis) increased in September 2024 compared to the same month in the preceding year (i.e., September 2023).

    He also said the increase recorded in the Headline Index for September 2024 was attributed to the rise in the average price of some items in the basket of goods and services at the divisional level compared to what these items recorded in August 2024.

    Adeniran said these increases affected food & Non-Alcoholic Beverages (16.94per cent), housing, water, electricity, gas & other fuel (5.47per cent), clothing & footwear (2.50 per cent), transport (2.13per cent), furnishings & household equipment & maintenance (1.64per cent), education (1.29per cent) and health (0.98 per cent).

    He said others are miscellaneous goods & Services (0.54per cent), restaurants & hotels (0.40per cent), alcoholic beverages, tobacco & kola (0.36per cent) as well as recreation & culture and communication which stood at 0.22 per cent, respectively.

    NBS boss said the month-on-month Headline inflation rate in September 2024 stood at 2.52per cent, this shows an average increase of 0.30per centon the general price level relative to August 2024 (2.22per cent).

    Adeniran said the percentage change in the average CPI for the twelve months ending September 2024 over the average CPI for the previous twelve months was 31.73per cent, showing an 8.83per cent increase compared to 22.90per cent recorded in September 2023.

    He said the Food Sub-index inflation rate in September 2024 was 37.77per cent on a year-on-year basis, 7.13per cent points higher than the rate recorded in September 2023 (30.64per cent).

    The rise in Food inflation on a year-on-year basis, he said, was caused by increases in prices of the following items guinea corn, rice, maize grains, beans, etc (bread and cereals class), yam, water yam, cassava tuber, etc (potatoes, yam & other tubers class), beer (local and foreign) (tobacco class), Lipton, Milo, Bournvita, etc (coffee, tea & Cocoa Class) and vegetable oil, palm oil etc (oil & fats class).

    He added that similarly, the food inflation rate on a month-on-month basis, in September 2024 was 2.64per cent which shows a 0.27per cent increase compared to the rate recorded in August 2024 (2.37per cent).

    On the causes of the soaring inflation, he said: “the rise can be attributed to the rate of increase in the average prices of Beer (Local and Foreign) (Tobacco Class), Vegetable Oil, Groundnut Oil, Palm Oil etc. (Oil & Fats Class), Beef, Gizzard, Dried Beef etc. (Meat Class), Lipton, Milo, Bournvita, etc (Coffee, Tea & Cocoa Class) and Milk, Egg etc. (Milk, cheese and Eggs Class).

    “The average annual rate of Food inflation for the twelve months ending September 2024 over the previous twelve-month average was 37.53%, higher by 11.88% points from the average annual rate of change recorded in September 2023 (25.65%).”

    Continuing, he said, “The “All items less farm produces and energy or Core inflation, which excludes the prices of volatile agricultural produces and energy stood at 27.43% in September 2024 on a year-on-year basis; up by 5.59% when compared to the 21.84% recorded in September 2023.

    “The highest increases were recorded in prices of the following items, Rents (Actual and Imputed Rentals for Housing Class), Bus Journey intercity, Journey by motorcycle, etc. (under Passenger Transport by Road Class), and Accommodation Service, Laboratory service, X-ray photography, Consultation Fee of a medical doctor, etc. (under Medical Services Class).

    “On a month-on-month basis, the Core Inflation rate stood at 2.10% in September 2024. This shows a decrease of 0.17% compared to 2.27% recorded in August 2024.

    “The average twelve-month annual inflation rate was 25.64% for the twelve months ending September 2024; this was 6.09% points higher than the 19.55% recorded in September 2023.

    “The Urban consumers annual inflation rate in September 2024 on a year-on-year basis was 35.13%. This indicated an increase of 6.46% points higher compared to the 28.68% recorded in September 2023.

    “Similarly, the Urban month-on-month inflation rate increased to 2.67% in September 2024, showing a rise of 0.28% compared to August 2024 (2.39%).

    “The corresponding twelve-month average for the Urban inflation rate was 33.95% in September 2024. This was 9.84% points higher compared to the 24.10% reported in September 2023.

    5. Also, the rural areas’ Headline Inflation rate in September 2024 was 30.49% on a year-on-year basis; this was 5.55% higher compared to the 24.94% recorded in September 2023.

    “On a month-on-month basis, the Rural inflation rate in September 2024 was 2.39%, up by 0.33% points compared to August 2024 (2.06%).

    “The corresponding twelve-month average for the Rural inflation rate in September 2024 was 29.76per cent. This was 7.97per cent higher compared to the 21.79per cent recorded in September 2023.

    6. The analyses of the states profiles shows that the all-item index for September 2024, on a year-on-year basis was highest in Bauchi (44.83per cent), Sokoto (38.74per cent) and Jigawa (38.39per cent), while Delta (26.35per cent), Benue (26.90per cent) and Katsina (27.71per cent) recorded the slowest rise in headline inflation on a year-on-year basis.

    “On the other hand, on a month-on-month basis, September 2024 recorded the highest increases in Sokoto (4.63per cent), Taraba (4.07per cent), Anambra (3.74per cent), while Kwara (1.14per cent), Cross River (1.78per cent) and Lagos (1.82per cent) recorded the slowest rise on Month-on-Month inflation.

     “The analysis of the food index at state levels in September 2024, on a year-on-year basis, recorded highest in Sokoto (50.47per cent), Gombe (44.09per cent), and Yobe (43.51per cent) while Kwara (32.45per cent), Rivers (32.80per cent) and Kogi (32.83per cent) recorded the slowest rise in Food inflation on a year-on-year basis.

    “On the other hand, on a month-on-month basis, September 2024 Food inflation was highest in Sokoto (5.94 per cent), Taraba (5.76 per cent), and Bayelsa (4.44per cent), while Kwara (0.88 per cent), Cross River (1.29 per cent) and Kogi (1.45 per cent) recorded the slowest rise in Food inflation.”

    The CPPE CEO said government needed to offer concessionary import duty on intermediate products for industrialists. The effects of high energy cost and exchange rate on inflation, he added, is quite significant.

    “It will be very difficult to tame inflation if we do not substantially   fix power, logistics and forex and security issues.  Regrettably, there are no quick fixes in these areas.  But it is important to prioritize these issues and drive accelerated progress with the right strategies,” Yusuf warned.

    According to him, it is troubling that “we are witnessing a resurgence of high inflationary pressures after some few months of respite despite policy measures to tame inflation, especially on the monetary side. Purchasing power had continued to plunge over the past few months. The situation had been further exacerbated by the surging petrol price.”

    For instance, he explained that headline inflation rose to 32.7 per cent in September as against 32.15 per cent in August, representing an increase of 0.55 per cent.  He added that there was also a marginal increase of 0.30 per cent in month-on-month inflation between August and September.  Food inflation maintained its uptrend rising to 37.77 per cent from 37.52 per cent after decelerating in few months ago.

    “The reality is that the dynamics driving inflation are yet to be effectively subdued. These factors include the depreciating exchange rate, surging fuel price, rising transportation costs,  logistics and supply chain challenges, high energy cost,  climate change including resultant incidents of flooding,  insecurity in farming communities and structural bottlenecks to production.  These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weakens profitability and dampens investors’ confidence,” Yusuf said.

    He regrets that not many investors can transfer cost increases to their consumers.  The implication of this, he said, is that manufacturers and other investors are taking a big hit resulting from erosion of profit margins as a result of consumer resistance and weak purchasing power.

    He however noted that the proposed economic stabilisation measures embodied in a bill currently before the national assembly would substantially address these concerns from the fiscal side.

    He added that the sub nationals have critical roles to play in mitigating the challenge of food insecurity and food inflation.  “They are closer to the stakeholders in the agricultural and food value chain and better placed to impact agricultural productivity. The provision of rural roads by the states is also very critical to reduce transportation costs and ease access to markets,” he said.

  • NBS: Nigeria’s inflation dips to 12.48%

    • Fed Govt to auction N70b bonds

    The National Bureau of Statistics (NBS) says the Consumer Price Index (CPI), which measures inflation for April, decreased to 12.48 per cent (year-on-year) from 13.38 per cent recorded in March.

    NBS said in its CPI and Inflation Report for April, posted on its Website yesterday, that the decrease represented 0.86 per cent and the lowest since February 2016.

    This is the 15th consecutive time that the inflation rate has declined since January last year.

    The NBS said increases were recorded in all the Classification of Individual Consumption by Purpose (COICOP) divisions that yielded the headline index.

    It said rural inflation rate also dipped to 12.13 per cent in April from 12.99 per cent in March.

    On month-on-month basis, it said the urban index rose to 0.85 per cent from 0.86 per cent recorded in March.

    The NBS said the rural index also remained unchanged from 0.82 per cent from the figure obtained in March.

    Meanwhile, the Federal Government has offered for subscription by auction, N70 billion worth of bonds in its May 23 auction, the Debt Management Office (DMO) said.

    The offer circular obtained from its website yesterday in Abuja, stated that it would sell N20 billion of a five-year re-opening issue maturing in April 2023 at 12.75 per cent.

    It would also sell N20 billion seven-year re-opening bond to mature in March 2025 at 13.53 per cent and another N30 billion 10-year re-opening bond at 13.98 per cent to mature in Feb. 2028.

    Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.

  • Nigeria’s inflation dips to 15.13 %

    The January inflation rate, measured by the Consumer Price Index (CPI), has further dropped to 15.13 per cent from 15.37 per cent recorded in December last year, the National Bureau of Statistics (NBS) said yesterday in Abuja.

    The CPI report, which measures inflation, started the year 2018 increasing by 15.13 per cent (year-on-year) in January.

    According to the bureau, this is 0.24 per cent points lower than the rate recorded in December (15.37 per cent).

    It stated that the rate recorded made it the twelfth consecutive disinflation (slowdown in the inflation rate though still positive) in headline year-on-year inflation since January 2017.

    It, however, stated that increases were recorded in the Classification of Individual Consumption by Purpose (COICOP) divisions that yield the Headline Index.

    On a month-on-month basis, the report stated that the Headline index increased by 0.80 per cent in January, 0.21 per cent points higher from the rate of 0.59 per cent recorded in December last year.

    The percentage change in the average composite CPI for the 12-month period ending January this year over the average of the CPI for the previous 12-month period was 16.22 per cent.

    It stated that the figures showed 0.28 per cent point lower from 16.50 per cent recorded in December 2017.

     

  • Nigeria’s inflation to remain at double-digit, says IMF

    Nigeria’s inflation to remain at double-digit, says IMF

    • Agriculture, oil to drive 0.8% growth 

    Nigeria’s inflation figure will remain at double-digit while the economy grows at 0.8 per cent this year, the International Monetary Fund (IMF) said yesterday. The strong performance seen in the agricultural sector and rising crude oil production are to drive the growth, it added.

    Speaking during the release of the World Economic Outlook (WEO) at the ongoing IMF Annual Meetings in Washington, D.C, its Chief Economist, Maurice Obstfeld, said Nigeria’s inflation which currently stands at 16.01 per cent in August will remain at double digit throughout the year.

    Inflation rate climbed for a 15th consecutive month in January to 18.7 per cent highest since September 2005. The Central Bank of Nigeria (CBN) targets single-digit inflation and made  efforts to bring it to current levels.

    Obstfeld said the introduction of the Anchor Borrowers’ Programme (ABP) by the CBN which supports local farmers with improved seedlings will continue to stimulate economic growth.

    He said: “Nigeria is expected to emerge from the 2016 recession caused by low oil prices and the disruption of oil production. Growth in 2017 is projected at 0.8 per cent, owing to recovering oil production and ongoing strength in the agricultural sector.”

    He however expressed concerns about policy implementation, market segmentation in a foreign exchange (forex) market that remains dependent on CBN’s interventions despite initial steps to liberalise the  market, and banking-system fragilities are expected to weigh on activity in the medium term.

    He explained that allowing greater exchange rate flexibility could act as a shock absorber and facilitate adjustment, supported by monetary policy settings to contain the inflation pressures that may result from currency depreciations.

    Continuing, he said financial stability needs to be maintained through enhanced financial sector regulation and supervision and by addressing emerging financial sector vulnerabilities, including increased domestic arrears and non-performing loans (NPLs).

    “Inflation in 2017 to 2018 is expected to remain elevated at two-digit levels in Angola and Nigeria, reflecting the persistent effects of past inflationary shocks coming from sharp currency depreciations including of the parallel exchange rate as well as higher electricity and fuel prices and, in the case of Nigeria, reflecting the assumption that monetary policy will remain accommodative going forward,” he said.

    The document also showed that many low-income developing countries continue to experience conflict and security disruptions (Afghanistan, Chad, Somalia, South Sudan, Yemen, a few parts of Nigeria), whereas parts of sub-Saharan Africa face food insecurity related to droughts (The Gambia, South Sudan, Somalia).

    Economic growth in sub-Saharan Africa is projected to reach 2.6 per cent this year and 3.4 per cent next year with sizable differences across countries.

    The main drivers were stronger-than-expected U.S. shale production and stronger-than-expected production recovery in Libya and Nigeria, which are exempted from production cuts. In addition, exports from Organisation of Petroleum Exporting Countries (OPEC) appeared to be sustained at relatively high levels, even with lower production.

    The Outlook also upgraded its global growth projections to 3.6 per cent for this year and 3.7 per cent for next—in both cases 0.1 percentage point above its previous forecasts, and well above 2016’s global growth rate of 3.2 per cent, which was the lowest since the global financial crisis.

    The report said for this year, most of Nigeria’s upgrade owes to brighter prospects for the advanced economies, whereas for next year’s positive revision, emerging market and developing economies play a relatively bigger role. The IMF expects sub-Saharan Africa, where growth in per capita incomes has on average stalled for the past two years, to improve overall next year.

    IMF said oil prices had fallen to less than $44 a barrel by late June, the lowest since November last year, right before the initial production cuts by OPEC were announced.

  • Forex challenge heightens Nigeria’s inflation, says IMF

    Forex challenge heightens Nigeria’s inflation, says IMF

    The International Monetary Fund (IMF) has blamed the double digit inflation rate in Nigeria on the challenges around foreign exchange (forex), adding that efforts of the Central Bank of Nigeria (CBN) to defend the naira by forex rationing crumbled like soap bubbles.
    About a year ago, its Managing Director, Christine Lagarde, met with the major players in the Nigerian economy, including President Muhammadu Buhari, Finance Minister, Mrs. Kemi Adeosun, and CBN Governor, Godwin Emefiele.
    The IMF chief canvassed the removal of fuel subsidy and naira devaluation— both of which have been done.
    In its policy paper on macroeconomic developments and prospects in low-income developing countries (LIDCs), unveiled at the weekend, IMF said the failures in the economy were due to “delayed/poorly managed policy adjustment”.
    “There were sharp movements in currencies across many LIDCs during 2015. Further sizeable depreciations were recorded in 2016 in commodity exporters under stress,” the paper read.
    IMF said this includes “Mongolia, where reserve levels have been significantly eroded, and Nigeria, where efforts to support the naira through foreign exchange rationing have gradually crumbled”.
    “Inflation has risen to troubling levels in a handful of cases, concentrated in sub-Saharan Africa. Among commodity exporters, large exchange rate depreciations were a key contributor in Mozambique, Nigeria, and Zambia”.
    The IMF blamed the failures on lack of business confidence in conflict zones and delay in policy adjustment by the country’s leadership.
    “Domestic policy failures cited include delayed/poorly managed policy adjustment to lower commodity prices — as in Nigeria, where foreign exchange rationing adversely affected debt service capacity of many corporates.
    “Nigeria (is) affected by Boko Haram-led attacks in the north and disruptions to oil production in the Niger Delta region. Aside from direct damage and increased security outlays, conflict situations undermine business confidence, investment, and tourism.”
    The fund also said Nigeria’s financial developments affected neighbouring countries like Chad, which also plunged into a recession, and Benin.
    “External developments have predictably played an important causal role in the emergence of financial sector stress, through falling commodity prices, declining remittances, and adverse spillovers from neighbors — as in the impact of Nigeria’s economic difficulties on Benin.
    “That said, teams’ assessments indicate that poor macroeconomic policies and weak supervision have also played a significant contributory role,” IMF said.

  • Nigeria’s inflation drops to 11.3%

    Nigeria’s inflation drops to 11.3%

    Nigeria’s consumer inflation fell for the third straight month in September, mainly due to a drop in the underlying “core” price growth that is closely watched by the central bank.

    Headline inflation eased to 11.3 percent year-on-year in September, down from 11.7 percent year-on-year in August and a 2012 peak of 12.9 percent in June, official statistics showed on Wednesday.

    Food inflation, the largest contributor to the headline index, rose slightly to 10.2 percent year-on-year in September, from 9.9 percent in August, the Nigerian Bureau of Statistics numbers showed.

    But core inflation, which excludes volatile items like food, dropped to 13.1 percent year-on-year in September from 14.7 percent the previous month.

    “The moderation in the Core index was partially as a result of base effects, as the sharp rise in the index exhibited in September 2011 implies that the relative rise in September 2012 may be muted,” an NBS document said.

    Reuters says the CBN kept its base interest rate on hold at 12 percent last month for the sixth time in a row, citing the high rate of core inflation as one of the reasons for keeping monetary policy tight.

    However, the CBN has for months prioritised supporting the volatile naira currency and building up foreign exchange reserves, running a relatively tighter monetary policy as a result.

    “Assuming nothing else changes, inflation is likely to continue to decelerate in the months ahead as tight money supply has more of an impact,” said Razia Khan, Head of Africa Research at Standard Chartered.

    “(But) despite the steady deceleration in Nigerian inflation, we still see interest rates on hold for the time being,” Khan added.