The consumer price index, which measures inflation, dropped to 11.31% in February 2018, according to monthly inflation data released by the National Bureau of Statistics (NBS).
Year-on-year, inflation increased by 11.31% in February 2019. This is 0.06% points lower than the 11.37% rate recorded in January 2019.
- Headline year-on-year shows inflation slowed down to 11.31% in February
- Year on Year Food inflation dropped to 13.47% in February 2019
- Year on Year Core inflation dropped to 9.80% in February 2019
- On a month-on-month basis, the headline index increased by 0.73% in February 2019
- The urban inflation rate increased by 11.59% (year-on-year) in February 2019
- On a month-on-month basis, the urban index rose by 0.76% in February 2019
- In February 2019, all items inflation on a year-on-year basis was highest in Kebbi State
- On a month on month basis, all items inflation was highest in Taraba
- Food inflation on a year on year basis was highest in Nasarawa State
- On a month on month basis, food inflation was highest in Taraba State
Inflation drops for the second consecutive months
The NBS data shows that inflation has dropped for the second consecutive month this 2019. In January 2019, the inflation rate increased by 11.37%, while it increased by 11.31% (year-on-year) in February 2019. The slight drop represents 0.06% points lowers in February than 11.37% which was recorded in January 2019.
On a month-on-month basis, the Headline index increased by 0.73% in February 2019, this also represents a 0.01% lower than 0.74% points recorded in January 2019.
Also, the percentage change in the average composite CPI for the twelve months was 11.56%, showing a 0.24% points from 11.80% recorded in January 2019.
Rural and Urban inflation also dropped
The urban inflation rate increased by 11.59% (year-on-year) in February 2019 from 11.66% recorded in January 2019, implying a 0.07% drop in Urban inflation. Also, rural inflation increased by 11.05% in February 2019 from 11.11% in January 2019.
On a month-on-month basis, the urban index rose by 0.76% in February 2019, down by 0.01% from 0.77% recorded in January 2019. Rural index also rose by 0.71%, the same rate recorded in January 2019.
Similarly, the corresponding twelve-month year-on-year average percentage change for the urban index is 11.95% in February 2019. This is less than 12.20% reported in January 2019, while the corresponding rural inflation rate in February 2019 is 11.23% compared to 11.46 percent recorded in January 2019.
Food index slows down
The composite food index rose by 13.47% in February 2019 compared to 13.51% in January 2019. This implies a 0.04% in food index. Note that the rise in the food index was caused by increases in prices of Fish, Bread and cereals, Potatoes, yam, and other tubers, Meat, Vegetables, Oils and fats, and Fruits.
On a month-on-month basis, the food sub-index increased by 0.82% in February 2019, down by 0.01% points from 0.83% recorded in January 2019.
Also, the average annual rate of change of the Food sub-index for the twelve-month period was 13.62%, implying a 0.31% points from the average annual rate of 13.93% recorded in January 2019.
Kebbi and Taraba States top states with the highest inflation rates
On all items, inflation on a year-on-year basis was highest in Kebbi (13.78%), Taraba (13.57%) and Kaduna (13.54%). On month on month basis, however, February 2019 all items inflation was highest in Taraba (1.87%), Ogun (1.83%), and Imo (1.62%).
Inflation on all items slowest in Cross River and Jigawa States
On all items in February, inflation on a year-on-year basis was slowest in Cross River (9.81%) Delta (9.60%) and Kwara (9.36%). On month on month basis, Jigawa recorded the slowest rise in inflation (0.13%), with Delta and Kogi recording negative inflation or price deflation (a general decrease in the general price level of goods and services).
Food Inflation highest in Nasarawa State
In February 2019, food inflation on a year on year basis was highest in Nasarawa (16.78%), Taraba (16.76%) and Abuja (16.29%). On month on month basis, however, food inflation was highest in Taraba (2.95%), Ogun (2.73%) and Nasarawa (2.42%).
Kogi and Benue recorded a slow rise in food Inflation
On a year on year basis, Kogi (11.68%), Delta (11.51%) and Abia (10.81%) all recorded the slowest rise in food inflation. But on month on month basis, Benue, Delta, Kogi, and Ondo all recorded food price deflation in February 2019.
What the drop in inflation means?
Inflation is calculated by obtaining the average change in prices of goods and services consumed by people on a daily, over a period of time.
Therefore, if food inflation slightly inches up, it implies that food items witnessed a quick increase in prices. However, when there is a slight drop in food inflation, it means food prices increased at a very slow rate.
It is important to bear in mind that food price spikes tend to be temporary and often the direct result of local bottleneck shortages. Excess demand demand over supply can also cause it.
How the rise in inflation affect food items?
The new inflation rate, for instance, shows a slow rise in food items (reduction in rate). It was reported that the rise in food index was caused by increases in prices of fish, bread and cereals, Potatoes, yam, and other tubers, meat, vegetables, Oils and fats, and Fruits.
Therefore, what you should expect is not a sharp drop in prices of fish or other food items from the original prices. But there is a slim chance for an increase, which would be relatively insignificant. Also, it may slightly improve your purchasing power (ability to buy more with less) for the period.
How businesses and the economy are affected?
Although Inflation slightly dropped in February 2019, it is still important that small businesses remain mindful of its effects. Even a slight increase could hurt capital expenditure and increase the cost of production for goods. Controlling inflation is seen as a healthy stimulus for the economy as a whole, but it can be quite challenging to keep in check.
Specifically, larger corporations are generally better-positioned to bear the brunt of inflation, as it can be offset by savings generated through economies of scale. Small firms, however, often take a direct hit on margin.
The released inflation rate implies that businesses revenue may slightly improve as the purchasing power of consumers improve, while this may also improve economic growth as export also inches up for the period under review.