Nigeria’s consumer prices rose at the slowest pace in 2 1/2 years in June as food costs climbed the least since March 2016. The annual consumer inflation rate was 11.2 percent from a year earlier, compared with 11.6 percent in May, the Abuja-based National Bureau of Statistics said in an emailed report Monday. The median estimate in a Bloomberg survey was for 10.9 percent. Prices rose 1.2 percent in the month.
The inflation rate fell even as the Nigerian government started releasing funding for its record 2018 budget of 9.12 trillion naira ($25 billion), which some analysts had anticipated would cause prices to rise. Price pressures are still expected to kick in on growing election-related spending ahead of February’s federal and state vote, with President Muhammadu Buhari seeking a second mandate.
The central bank’s monetary policy committee will tomorrow announce its decision on its main interest rate, which it has held at 14 percent since July 2016 to curb inflation. The bank targets an inflation rate of 6 percent to 9 percent and has signaled rate cuts when price growth moves closer to this band.
Food prices increased 12.98 percent in June from a year earlier, a seventh straight month of deceleration, the agency said.
Food Prices continue to rise
However, despite the positive index, the cost of food continues to increase and Nigerians have had to pay more for basic food supplies. Nigeria’s annual inflation rate dropping to 11.23% for its seventeenth consecutive decline and lowest in almost three years.
This is 0.37% points less than the rate recorded in May 2018 (11.61%) and represents the seventeenth consecutive disinflation since January 2017.
The National Bureau of Statistics (NBS) disclosed this in its CPI report titled ‘CPI and Inflation Report June 2018’, released on Monday, July 23, 2018, in Abuja, Nigeria’s capital city.
The CPI measures the average change over time in prices of goods and services consumed by people for the day-to-day living.
According to the report, despite the continued annual disinflation, food prices increased 12.98% in June from a year earlier and a seventh straight month of deceleration.
The NBS Data showed that month-on-month inflation rose from 1.09% points in May to 1.24% points in June.
“Headline inflation falls 17th consecutive time (11.23% year on year in June 2018 compared to 11.61% in May 2018); food inflation(12.98% from 13.45%); Core (10.4% from 10.7%). Headline month-on-month inflation, however, rose 1.24% in June from 1.09% in May,” the report read.
The NBS noted that the composite food index rose by 12.98% in June 2018 (13.45% in May 2018). The Statistical office said the rise in the food index was caused by increases in prices of Potatoes, yam and other tubers, Bread and cereals, Fish, oils and fats, Milk, Cheese and Eggs, Vegetables, Fruits and Meat.
On a month-on-month basis, the food sub-index increased by 1.57% in June 2018, up by 0.2% points, from 1.33% recorded in May 2018. The average annual rate of change of the Food sub-index for the twelve-month period ending June 2018 was 17.75%, down 0.61% points from the average annual rate of change recorded in May 2018 (18.36%).
The inflation report is coming when Nigeria’s central bank monetary policy committee is meeting to decide key economic issues and the lending rate. The key lending rate has been held constant at 14% since July 2016 to support troubled naira and curb inflation.
Commenting on the inflation numbers on Channels TV, Bismarck Rewane, economic analyst, said the month-on-month inflation numbers are disturbing.
“The rate of moderation in inflation is slowing which means that we are getting close to the point of deflation,” he said. “Inflationary pressures are going to come up. The peak problem we have today is the price of diesel and that is what is responsible for the big difference between rural and urban inflation.
“When you annualise the month on month inflation, it actually comes out at 15.94%, that is disturbing and that is going to affect the discussions at the MPC meeting today and tomorrow. Also important is 17 consecutive months of annual decline in inflation but it’s now getting to the point when it will start going up again. Month on month inflation is more current than year on year inflation.
“The price inflation you got today of 11.23 is actually comparing the prices of that basket of last year June to this year June. When you compare the price of that basket between May and June, you see that the actual rate of inflation has increased. When you annualise that, it comes to 15.94 which is significantly higher than 11.23 so that is the cause for worry that the inflation expectations and current inflation are pointing towards an increase.”