Inflation, Nigeria

…May hit 12% by year end

By Elizabeth Adegbesan

At the backdrop of the Yuletide commercial activities, the monthly inflation figures is set to hit 12 percent at year end just as the November readings released yesterday by the National Bureau of Statistics, NBS, show a fourth consecutive month rise to 11.85 percent, Year-on-Year, YoY.

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The November figure also represents a 0.24 basis point rise from 11.6 percent in October this year.

The NBS’ Consumer Price Index (CPI) Report for November 2019 stated: “Increases were recorded in all Classification of Individual Consumption according to Purpose (COICOP) divisions that yielded the Headline index. On month-on-month basis, the Headline index increased by 1.02 percent in November 2019, this is 0.05 percent rate lower than the rate recorded in October 2019 (1.07) percent.

“The percentage change in the average composite CPI for the twelve months period ending November 2019 over the average of the CPI for the previous twelve months period was 11.35 percent, representing a 0.05 percent point from 11.30 percent recorded in October 2019.”

The report showed that YoY urban inflation increased by 12.47 percent in November 2019 from 12.20 percent in October 2019, while the rural inflation increased YoY by 11.30 percent in November 2019 from 11.07 percent in October 2019.

On monthly basis, the urban index dropped by 1.07 percent in November 2019, down by 0.08 basis point from 1.15 percent recorded in October 2019, while the rural index also rose by 0.98 percent in November 2019, down by 0.01 bpt from the rate recorded in October 2019 (0.99 percent).

On food inflation, the report noted that the composite food index rose by 14.48 percent in November 2019 compared to 14.09 percent in October 2019 citing increases in prices of bread, cereals, oils and fats, meat, potatoes, yam and other tubers, and fish as cause.

Similarly, the food sub-index increased MoM by 1.25 percent in November 2019, down by 0.08 percent points from 1.33 percent recorded in October 2019.

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States with the highest YoY food inflation rate in November 2019 were Sokoto (18.77 percent), Kebbi (18.08 percent) and Ekiti (17.18 percent) while states with the highest MoM food inflation were Kwara (2.92 percent), Sokoto (2.72 percent) and Bayelsa and Edo (2.66 percent).

Commenting on the development, analysts at Cowry Asset Management Limited said: “The rising trend in annual inflation was on the back of the sustained increase in annual food inflation. This was further lifted by the gentle upturn in core inflation rate which albeit remained in single-digit.

“We expect the rise in annual inflation rate to be sustained in December as food prices increase amid year-end festive season; however, we should see it moderate m-o-m in January 2020 amid likely slowdown in spending activities as businesses resume”.

On their part, analysts at United Capital Management Plc said: “We note that shortfall in supply (amid land border closure) relative to demand (buoyed by the upcoming Christmas and New Year festivities) pressured prices higher. Notably, prices of items imported/smuggled (cereals, fish, meat as well as oil and fats) via land borders, continued to witness the highest increases within the food segment.

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“However, we believe that the renewed pressure in core inflation sub-index, despite continued stability in FX rates and energy prices, was largely driven by the high-level liquidity in the system throughout the review period. Also, we highlight that the slight moderation in the m/m rate in November 2019 was as a result of the high base-effect in October 2019.



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