National-Bureau-of-Statistics-NBS

In Nigeria Inflation Declines Further to 11.61% As US Hikes Interest Rate

For the 16th month, inflation rate continued a downward trajectory, declining from 12.48 per cent in April to 11.61 per cent in May.

This is just as the US Federal Reserve Wednesday hiked its benchmark short-term interest rate a quarter percentage point and indicated that two more increases are likely this year.

The Fed pushed interest rate to a range of 1.75 per cent to two per cent and this may have negative effect on capital flows to Nigeria and may compel the Central Bank of Nigeria (CBN) to maintain its tight monetary policy stance.

THISDAY had reported on Monday that Nigeria’s external reserves has maintained a sustained decline in the past three weeks as foreign portfolio investors (FPI) continued to weigh the possibility that the US Fed would raise interest rate at its meetingWednesday.

Meanwhile, the latest inflation figures released by the National Bureau of Statistics (NBS) showed that the Consumer Price Index (CPI), which measures inflation stood at 11.61 per cent (year-on-year) in May 2018, saying: “This is 0.87 per cent points less than the rate recorded in April 2018 (13.34) per cent. “

However, by this claim, the NBS inadvertently contradicted itself, having put the inflation rate for April at 12.48 per cent last month, contrary to its latest report alluding to April inflation rate as 13.34 per cent.

But a closer look at the info graph contained in the report reflected the accurate rate for April.

The statistical agency stated that in the May figures, increases were recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yield the headline index.

COICOP is a classification and analysis of individual consumption expenditures incurred by households, non-profit institutions serving households and government according to their purpose.

It includes categories such as clothing and footwear, housing, water, electricity.

On a month-on-month basis, the Headline Index increased by 1.09 per cent in May 2018, up by 0.26 percentage points over the rate recorded in April 2018.

The percentage change in the average composite CPI for the 12 months period ending May 2018 over the average of the CPI for the previous 12 months period was 14.79 per cent, indicating a 0.41 percentage point decline from 15.20 per cent posted in April 2018.

The composite food index rose by 13.45 per cent in May 2018.

This rise in the index was caused by increases in prices of potatoes, yam and other tubers, vegetables, fish, bread and cereals, fruits and meat.

On month-on-month basis, the food sub-index increased by 1.33 per cent in May 2018, up by 0.42 percentage points from 0.91 per cent recorded in April.

The average annual rate of change of the food sub-index for the 12-month period ending May 2018 over the previous 12-month average was 18.36 per cent, 0.53 per cent points from the average annual rate of change recorded in April (18.89) per cent.

The ”all items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce stood at 10.7 per cent in May 2018, down by 0.2 per cent from the rate recorded in April (10.9) per cent.

On month-on-month basis, the core sub-index increased by 0.98 per cent in May 2018.

This was up by 0.11 per cent when compared with 0.87 per cent recorded in April.

The highest increases were recorded in prices of hairdressing saloons and personal grooming establishment, vehicle spare parts, fuels and lubricants for transport equipment, books and stationery, domestic services and household services, pharmaceutical products, paramedical services, medical services and passenger transport by road.

The average 12-month annual rate of change of the index was 11.83 per cent for the 12-month period ending May 2018; this is 0.19 per cent points lower than 12.02 per cent recorded in April.

Also, all items inflation on year on year basis was highest in Kebbi (14.65 per cent), Yobe (13.68 per cent) Jigawa (13.62 per cent), while Kwara (8.87 per cent), Kogi (9.07 per cent) and Delta (9.22 per cent) recorded the slowest rise in headline year- on -year inflation.

Month-on-month basis however, May 2018 all items inflation was highest in Adamawa (1.98 per cent), Kwara (1.79), and Kaduna (1.70 per cent), while Kogi (0.02 per cent), Lagos and Ogun (0.52 per cent) and Cross River (0.56 per cent) recorded slowest rise on a month- on-month all item basis in May 2018.

In May 2018, food inflation on a year-on-year basis was highest in Yobe (15.86 per cent), Kebbi (15.62 per cent) and Jigawa (15.56 per cent), while Kogi (8.54 per cent), Benue (9.93 per cent) and Akwa Ibom (11.13 per cent) recorded the slowest rise in food inflation.

On month-on-month basis, however, May 2018 food inflation was highest in Taraba (2.80 per cent), Adamawa (2.38 per cent) and Enugu (2.36 per cent), while Kogi, Oyo and Ekiti all recorded food price deflation or negative inflation (general decrease in the general price level of goods and services or a negative inflation rate) in May 2018.

The Federal Reserve hiked its benchmark short-term interest rate a quarter percentage point Wednesday and indicated that two more increases are likely this year.

The move pushes the funds rate target to 1.75 per cent to 2 per cent. The rate is closely tied to consumer debt, particularly credit cards, home equity lines of credit and other adjustable-rate instruments.

In an unusually terse statement that ran just 320 words, the Federal Open Market Committee changed multiple phrases from its previous missives, pointing to a more optimistic view on economic growth and higher inflation expectations.

Though the statement contained less than half the words of some of the committee’s typical communiques, there was a lot to unpack in the language.

Post Author: Friday Ekeoba