Inflation rate now 15.13%, slows for 12th consecutive month

Nigeria’s annual inflation has slowed for the 12th consecutive month in a row in January to 15.13 per cent, compared to 15.37 per cent in December, the National Bureau of Statistics (NBS) has said.

The Statistics office on Wednesday disclosed that Consumer Price Index (CPI) used to measure inflation drops to 15.13 per cent in January 2018.

The monthly report showed that the nation’s inflation rate slowed by 0.24 per cent points lower than the rate recorded in 15.37 per cent in December 2017, making it the twelfth consecutive disinflation (slowdown in the inflation rate though still positive) in headline year on year inflation since January 2017.

The bureau in its CPI report stated that, “On a month-on-month basis, the Headline index increased by 0.80 per cent in January 2018, 0.21 percent points higher from the rate of 0.59 per cent recorded in December 2017.

“The percentage change in the average composite CPI for the twelve-month period ending January 2018 over the average of the CPI for the previous twelve-month period was 16.22 per cent, showing 0.28 per cent point lower from 16.50 per cent recorded in December 2017.

“The Urban inflation rate rose by 15.56 per cent (year-on-year) in January 2018 from 16.78 per cent recorded in December 2017, while the Rural inflation rate also eased by 14.76 per cent in January 2018 from 15.02 per cent in December 2017.

On month-on-month basis, the urban index rose by 0.83 percent in January 2018, up by 0.17 from 0.66 percent recorded in December 2017, while the rural index also rose by 0.77 percent in January 2018, up by 0.23 when compared with 0.54 per cent in December 2017.”

The bureau stated that high year on year food prices and food price pressure continued into December though generally at a slower pace year on year.

“The Food Index increased by 18.92 per cent (year-on-year) in January 2017, down from the rate recorded in December (19.42 per cent). On a month-on-month basis, the Food sub-index increased by 0.87 per cent in January 2018, down by 0.29 per cent from 0.58 per cent recorded in December.

“The average annual rate of change of the Food sub-index for the twelve-month period ending January 2018 over the previous twelve-month average was 19.62 per cent, 0.07 per cent points from the average annual rate of change recorded in December 2017 (19.55) per cent.

“The rise in the food index was caused by increases in prices of imported food in general as well as bread and cereals, milk, cheese and eggs, Vegetables, Fish, Coffee tea and cocoa, meat, Potatoes yam and other tubers and Oil and fats,” the report by NBS stated.

InvestmentOne Researcher said, “We highlight that the slowdown was mainly the result of the high base effect which was more prominent on the Food sub-index where prices inched up 18.92 per cent y/y in January 2018 against 19.42 per cent in December 2017.

“Unlike in 2017, where the benefit of the base effect was more prominent in the Core sub-index, 2018 base effect is expected to be driven by the Food sub-index which surged to an eight year high in 2017, which may not be unconnected with the disruptions to productivity in the Agriculture sector.

“On the contrary, we believe the on-going scarcity of PMS nationwide, which led to the 30 per cent y/y increase in the average price paid by consumers to N190/litre may have hindered the potential downward movement in the Core sub-index, unchanged at 12.09 per cent y/y.

“In our view, this highlights the inflationary pressures in the economy due to the shortage of PMS and the continued conflicts in the North, which could be hindering output in the Agriculture sector.

The company maintained that the rate of increase in consumer prices in 2018 is likely to slow on the back of the high base effect, which may be more pronounced in the Food sub-index.

“Our opinion may be supported by the insistence of the administration to maintain stability in the economy in support of a potential re-election in 2019. While this may keep the official price of PMS at N145/litre, we point out that the continued scarcity of the product which has seen the price paid by consumer rise 30 per cent y/y and 11 per cent m/m to N190/litre, poses a significant risk to the outlook for inflation if the availability does not increase in the near term,” InvestmentOne analysts explained.

Stories by Motolani Oseni