Inflation in Nigeria declines for the second time

| By Anayo Ezugwu | Apr 24, 2017 @ 01:00 GMT |

DESPITE the increase in the prices of goods and services in Nigeria, the National Bureau of Statistics, NBS, in its latest Consumer Price Index, CPI, which measures inflation rate stated that inflation dropped from 17.78 percent in February to 17.26 percent in March.

The drop in the inflation rate by 0.52 percentage points in March according to the NBS report is the second decline recorded on the year-on-year basis, representing the effects of stabilising prices in already high food and non-food prices as well as favourable base effects over 2016 prices. The first decline was recorded in February when inflation dropped by 0.94 percent.

The report published on NBS website on Thursday, April 13, stated that the decline is an indicative of early effects of a strengthened naira in the foreign exchange rate market. “Price Increases were recorded in all Classification of Individual Consumption by Purpose, COICOP, divisions that yield the headline index. However, the major divisions responsible for accelerating the pace of the increase in the headline index were housing, water, electricity, gas and other fuel, education, food and alcoholic beverages, clothing and foot ware and transportation services.”

According to the report, on a month-on-month basis, the headline index increased by 1.72 percent in March 2017, 0.23 percent points higher from the rate recorded in February. It state that the food index increased by 18.44 percent (year-on-year) in March, slightly down 0.09 percent points from rate recorded in February (18.53) percent driven by increases in the prices of bread, cereals, meat, fish, potatoes, yams and other tubers and wine.

The NBS report noted that the slowest increase in food prices year-on-year were recorded by soft drinks, fruits, coffee, tea and cocoa. “It should be noted that the headline index is made up of the core index and farm produce items. Processed foods are included in both the core and food sub-indices; this Imply that these sub-indices are not mutually exclusive. Price movements recorded by all items less farm produce or core sub-index rose by 15.40 percent (year-on-year) in March, down by 0.60 percent points from rate recorded in February (16.00) percent.

“During the month, the highest increases were seen in miscellaneous services relating to the dwelling, electricity, solid fuels, clothing materials and other articles of clothing, liquid fuel, spirits as well as fuels and lubricants for personal transport equipment. The urban index rose by 18.27 percent (year-on-year) in March from 18.57 percent recorded in February.

“The rural index increased by 16.47 percent in March from 16.98 percent in February. On month-on-month basis, the urban index rose by 1.76 percent in March from 1.52 percent recorded in February, while the rural index rose by 1.69 percent in March from 1.47 percent in February.”

The report showed that the corresponding twelve-month year-on-year average percentage change for the urban index increased from 18.42 percent in February to 18.79 percent in March, while the corresponding rural index also increased from 15.70 percent in February to 16.05 percent in March. It equally stated that the composite food index rose by 18.44 percent in March 2017.

The rise in the index, the report said was caused by increases in prices of potatoes, yam and other tubers, bread and cereals, meat, milk, cheese and eggs. “On a month-on-month basis, the food sub-index increased by 2.21 percent in March, up by 0.22 percent points from 1.99 percent recorded in February. The average annual rate of change of the Food sub-index for the twelve-month period ending in March 2017 over the previous twelve-month average was 16.60 percent, 0.47 percent points from the average annual rate of change recorded in February (16.13 percent).

The all items less farm produce or core sub-index, which excludes the prices of volatile agricultural produce eased by 15.4 percent during the month, 0.60 percent points from 16.00 percent recorded in March as all key divisions which contributes to the index increased. On a month-on-month basis, the core sub-index increased by 1.32 percent in March, 0.22 percent points higher from 1.10 percent recorded in February. The highest increases were recorded in miscellaneous services relating to the dwelling, electricity, books and stationeries, solid fuels, clothing materials and other articles of clothing, liquid fuel, spirits and fuels and lubricants for personal transport equipment.

The average 12-month annual rate of rise of the index was recorded at 16.68 percent for the twelve-month period ending in March 2017, 0.24 percent points higher from the twelve-month rate of change recorded in February.