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Inflation rate drops for the 18th consecutive time

Inflation increased by 11.14% (year-on-year) in July 2018 which is 0.9% less than the recorded rate in June, 2018 (11.23%).

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Key Highlights 

  • Inflation rate stood at 11.14% in July.
  • Inflation rate reduces by 0.09% from June.
  • Inflation rate increased by 1.13% on month-on-month basis.
  • Food inflation stood at 12.85% in July.
  • Core Inflation stood at 10.2% in July.

The National Bureau of Statistics (NBS), on Monday released the Consumer Price Index (CPI) for July 2018. The CPI measures the average change over time in prices of goods and services consumed by people for day-to-day living. 

The report shows inflation increased by 11.14% (year-on-year) in July 2018 which is 0.09% less than the recorded rate in June, 2018 (11.23%). This reduction is the eighteenth consecutive month inflation rate has been dropping since January, 2017. 

Core Inflation 

According to the NBS report, core inflation stood at 10.2% and decreased by 0.2% in the month of July from the 10.4% recorded in June. On a month on basis, it rose by 0.81% in the period under review. It was down by 0.22% when compared with 1.03% recorded in June. 

However, the percentage change in the average composite CPI for the twelve-month period ending July, 2018 over the average of the CPI for the previous twelve-month period was 11.48%, which is a reduction of 0.17% from 11.65% recorded in June. 

Food Inflation 

The Composite Food Index rose by 12.85%, during the period under review, compared to 12.98% in June 2018. The figure shows food inflation has been declining year on year for the tenth consecutive month. The reduction was caused by the increase in price of potatoes, yam and other tubers, fish, bread and cereals, Oil and fats, vegetables and fruits. 

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Also, on a month-on-month basis, the Food sub-index increased by 1.40% in the month of July 2018, it went down by 0.17% from 1.57% that was recorded in the previous month of June. 

The CPI report also shows that the average annual rate of change of the Food sub-index for the twelve-month period ending July 2018 over the previous twelve-month average was 17.10%, which is a reduction of 0.65% from the average annual rate of change recorded in the month of June (17.75%). 

Urban Inflation

Meanwhile, the report equally shows that there is a 11.66% reduction in the urban inflation rate (year-on-year) in July 2018 from 11.68% recorded in the previous month of June 2018. The rural inflation rate remained unchanged, thus, standing at the same 10.83% recorded in the previous month of June 2018.

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In the same vein, the Urban Index rose by 1.23% in July 2018 from 1.24% recorded in June, which shows a reduction of 0.01 on a month-on-month basis. For Rural Index, it also rose by 1.18%, from the recorded figure of 1.23% in the previous month of June.

The corresponding 12-month year-on-year rural inflation rate in the period under review is 13.64% compared to 14.08% in June 2018 while the corresponding urban index was 14.33% in July which is less than 14.71% reported in June, 2018.

All Items Inflation (states)

Meanwhile, during the month under review, Kebbi State recorded the highest all-items-inflation with a figure of 13.43%. Rivers State (13.09%) and Kaduna State (13.01%) followed in that order, while Plateau State (8.82%) recorded the slowest rise in price during the period. Ogun followed with 8.86% while Kwara recorded 9.63% on a year-on-year all item basis in July, 2018. 

Implication 

For investors, falling inflation means lower yields on treasury bills and other government securities. For select borrowers, the drop in inflation, in theory, should lead to lower rates. 

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Hospitality & Travel

34.5% decline in aviation jet fuel daily sufficiency, a worry for airline companies

Decline in daily aviation fuel sufficiency worry airlines as air passengers are expected to increase in the festive season.

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Airline operators will pay $3,500 per passenger if they break protocols – PTF COVID-19, Global Air passenger slump to persists til 2023- Moody’s 2023- Moody’s

The 34.5% decline in the daily sufficiency of aviation jet fuel may constitute a worry for airline companies in the country.

Considering that there is usually more people traveling due to the traditional Christmas and New Year festivities, resulting in increased flight patronage, the current total stock level appears to be low.

The observation is according to the daily petroleum products days sufficiency (total stock level data) compiled by the Petroleum Products Pricing Regulatory Agency (PPPRA).

In line with the data available on the PPPRA website,

  • The current total stock level of Aviation Turbine Kerosene (ATK), also known as aviation jet fuel or Jet-A1, stands at 89.04 million litres.
  • Eleven days earlier, the total stock level was 135.83 million litres – indicating a 34.5% decline.
  • Before now and since the start of the 2020, total stock level has been relatively unstable, with the recent highest total stock level of 187.40 million litres recorded on the 2nd of October 2020 – indicating about 60 days sufficiency; and the lowest 54.96 million litres was recorded on the 17th of July – about 18 days sufficiency.
  • As at the time the latest report was released, 27th November 2020, the total ATK stock was land-based stock.
  • Checks indicate there has been no receipt of ATK from the 19th of November, after the last receipt of 5.56 million litres on the 18th of November.

What they are saying

Speaking to Nairametrics regarding the decline, the MD/CEO of Jushad Oil and Gas Ltd, Mr. Bosun Paseda, submitted that the decline is due to the continuous increase in the exchange rate.

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He said, “The exchange rate is very high and unstable. You will discover that importers do not have access to the CBN rate and have to make recourse to the parallel market. The landing cost is currently higher than the rate we sell at the airport. That’s why marketers do not want to bring the product.

“Scarcity is likely to set in, but the reason there is no scarcity yet is because people are not really flying. If it stays the same, then scarcity may set in, when travel increases.”

Responding to the question on whether the decline in stock has affected the price of the product, Mr Paseda noted that it has not really affected the price of the product as consumption is currently low.

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What you should know

Nairametrics recently reported that oil markets yearned for airlines to resume operations following several months of not operating due to the Covid-19 pandemic travel restrictions.

  • Aside from the loss of revenues to airline companies, the call was necessary considering that Jet fuel demand averages about 8 million barrels per day worldwide – indicating that oil companies were also not recording enough revenues.
  • As a result of the pandemic, the International Energy Agency expects demand for Jet fuel and Kerosene to fall by 2.1 million bpd on average in 2020. This has, however, improved following lifting of travel restrictions in many countries.

Now that flights have resumed operations, it appears airline companies in the country may be in line to face another hurdle before the year runs out. The likelihood of facing this hurdle is highly contingent on receipt of ATK used in powering flights and increased travels. If things remain the same in terms of daily sufficiency of ATK needed to power their flights, scarcity may set in.

  • Remember that the lowest ATK of 54.96 million litres – about 18 days sufficiency, recorded on the 17th of July, was during travel restrictions. The decline in that period didn’t create concerns and it picked up days later.

What this means

  • With the national average daily consumption of ATK three million litres, this depicts that current total stock level of 89.04 million litres will only sustain for about 30 days, all things being equal.
  • Even though it appears this stock level is good, the steady decline in the stock level as illustrated in the graph above raises immediate concerns.
  • Also, one may conclude that receipt of ATK has stalled in recent days, having received only a total of 12.68 million litres in the last two weeks, since 12th November. This observation appears to denote that should the product receipt trend continue, scarcity may occur in the near future.

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Economy & Politics

Governors to meet on Wednesday over rising insecurity

The governors of the 36 States of the federation will hold an emergency virtual meeting to discuss growing insecurity in the country.

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Oil Price Crash: Governors to meet on budgetary and economic issues, Insecurity: Governors to meet on Wednesday over rising insecurity

The Nigerian Governors Forum (NGF) has announced that the Governors of the 36 States will hold an emergency virtual meeting to discuss the recent killings and kidnappings by terrorist groups, and agree on a new national security plan to secure the lives of citizens.

This was disclosed in a statement by Head, Media and Public Affairs of the NGF, Mr Abdulrazaque Bello-Barkindo, on Monday in Abuja.

(READ MORE: Labour leaders reportedly walk-out on Ministers over fuel, electricity price hike)

The NGF disclosed in its statement that the Governors would also receive updates on the events following the disbandment of the SARS alongside the rising insecurity.

Other issues that will be discussed by the Governors include:

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  • CACOVID funding palliatives and updates across the states.
  • Joint meetings between the CBN and Kaduna State Governor, Nasir el-Rufai, on accessing pension funds to finance infrastructure development.
  • Updates on the ASUU strike. Issues related to Stamp Duty and the Water Resources Bill will also be discussed at the meeting.

What you should know 

There has been a rise in reported cases of kidnappings and killings by terrorists groups and bandits, especially in Northern Nigeria.

Nairametrics reported earlier that President Muhammadu Buhari had condemned the killing of farmers by Boko Haram on Saturday. The President added that the Federal Government had given the armed forces support to tackle insecurity in the country.

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Coronavirus

Covid-19: FG to reduce fatalities by strengthening capacity – Health Minister

The Minister said that the ministry plans to increase its capacity to battle the disease through personnel supervision.

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Minster for health, FG ignores travel ban calls despite Uganda, US, others move against coronavirus, FG reports 10 new cases of COVID-19, COVID-19: FG to inaugurate 18-man vaccine task team

The Federal Ministry of Health (FMOH) has announced plans to reduce case fatalities of the Covid-19 pandemic by focusing on improving the capability to manage the virus.

This was disclosed by the Minister of Health, Dr. Osagie Ehanire, during the daily Joint National Briefing of the Presidential Task Force (PTF) on Covid-19 in Abuja.

The Minister said that the ministry plans to increase its capacity to battle the disease through personnel supervision.

He said, “We hope to reduce case fatalities by strengthening our capacity to manage cases, but it is only possible if persons test themselves early. All cases, whether home-based or institutional are to be supervised by medical personnel. This is particularly  important, given the threat posed by the spiralling rate of infection in countries with which Nigeria has strong political, business, social, and family relations.”

(READ MORE: FG may stop interstate and inter-town travels)

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He urged Nigerians to cut off travel to high-risk countries, as the travel rate determines the risk the ministry could contain with.

“There is a correspondingly high volume of travel between Nigeria and those countries, which is what also determines the risk. I also urge all Nigerians to cut off all travels, especially international travels, most especially travels to high risk countries, except it is very urgent.”

He stated that it might take Nigeria a while before securing the vaccines, even though the country had started the process of securing access to a vaccine.

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“Although we are positioning our country for access to the Covid-19 vaccine, it may still take a while for countries to access it and for all citizens to be vaccinated. It is, therefore, more realistic that we adopt preventive measures which have proven to be successful in controlling the pandemic,” Ehanire added.

What you should know: Nairametrics reported in October that Dr. Ehanire said Nigeria increased its daily testing capacity for Covid-19 to over 3,500/day.

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