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Nigeria’s inflation rate hits 13.71% as food prices soar

Nigeria’s inflation rate has risen to 13.71% as prices jump in almost every sector.

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Despite billions on agriculture, food inflation up by 108% since 2015.

The Nigerian inflation rate rose to 13.71% (year-on-year) in September 2020 indicating 0.49% point higher than 13.22% recorded in August 2020. This was contained in the Consumer Price Index (CPI) report, released by the National Bureau of Statistics (NBS). 

According to the report, Nigeria has endured persistent increase in inflationary rate, growing from 12.13% in January to 13.71% in September, which is highest recorded in 30 months. 

On a month-on-month basis, the Headline index increased by 1.48% in September 2020. This is 0.14% rate higher than the rate recorded in August 2020 (1.34%). Also, the urban inflation rate increased by 14.31% (year-on-year) in review period from 13.83recorded in August 2020, while the rural inflation rate increased by 13.14% in September 2020 from 12.65% in August 2020. 

READ: Data war: MTN dwarfs Airtel, Glo, 9mobile, with 1.59 million new subscribers in August

Food inflation 

A closely watched component of the inflation index, rose by 16.66% in September 2020, 0.66% increased compared to 16% recorded in the previous month, while on a month-on-month basis, the food sub-index rose by 1.88% compared to 1.67% recorded in August 2020. 

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Meanwhile, the rise in the food index was caused by increases in prices of Bread and Cereals, Potatoes, Yam and other tubers, Meat, Fish, Fruits and Oils and fats. 

 Core inflation: The Core inflation also known as “All items less farm produce”, which excludes the prices of volatile agricultural produce stood at 10.58% September 2020up by 0.06% when compared with 10.52% recorded in August 2020. 

The highest increases were recorded in prices of Passenger transport by air, Medical services, Hospital services, Pharmaceutical products, Passenger transport by road, Motor cars, Vehicle spare parts, Maintenance and repair of personal transport equipment, Repair of furniture and Paramedical services. 

READ: Estates in Lekki increase electricity tariff to N105/kWh

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Worst hit States 

Northern states in Nigeria top the list of States that recorded highest inflation in the month of September, with Bauchi State leading the list at 17.85%, closely followed by Zamfara at 17.42% and Kogi State at 16.66%. Others on the list are Yobe (15.71%) and Plateau (15.61%). 

On the flip side, Kwara State recorded the least inflation rate at 10.53%, followed by Abuja at 10.59%, Lagos (11.19%), Ondo and Cross River State at 11.76% and 11.81% respectively. 

What this means 

Inflations rate at 13.71% and food inflation at 16.66% indicates that the purchasing power of consumers is consistently and rapidly declining on monthly basis, despite income of most Nigerians pegged at a fixed level while others earning lower income. 

READ: UPDATED: Nigeria’s inflation rate rises to 12.34% as COVID effects bite harder

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Macro-Economic News

Nigeria’s inflation rate hits 15.75% in December 2020, highest in 3 years

This is 0.86% points higher than the rate of 14.89% recorded in November 2020.

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Despite billions on agriculture, food inflation up by 108% since 2015.

Nigeria’s inflation rate increased by 15.75% (year-on-year) in December 2020, the highest rate recorded in 3 years.

According to the latest Consumer Price Index report, released by the National Bureau of Statistics (NBS), the latest figure is 0.86% points higher than the rate of 14.89% recorded in November 2020.

On a month-on-month basis, the index increased by 1.61% in December 2020. This is 0.01% point higher than the rate recorded in November 2020 (1.60%).

READ: Inflation rate up 207% since 2009 as bad economic policies ravages naira.

Food inflation

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The closely watched index rose sharply by 19.56% in December compared to 18.3% recorded in the previous month.

  • On a month-on-month basis, the food sub-index increased by 2.05% in December 2020, up by 0.01% point from 2.04% recorded in November 2020.
  • The rise in the food index was caused by increases recorded in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.

READ: Hope rises for employment in December 2020 and January 2021 – CBN survey Report 

Core inflation

The “All items less farm produce’‘ or Core inflation, which excludes the prices of volatile agricultural produce stood at 11.37% in December 2020, up by 0.32% when compared with 11.05% recorded in November 2020.

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  • Also, on a month-on-month basis, the core sub-index increased by 1.10% in December 2020. This was up by 0.39% when compared with 0.71% recorded in November 2020.
  • The highest increases were recorded in prices of passenger transport by air, medical services, hospital services, shoes and other footwear, passenger transport by road, miscellaneous services relating to dwellings, hairdressing salons and personal grooming establishments, and repair of furniture.
  • Others include vehicle spare parts, pharmaceutical products, motor cars, maintenance and repair of personal transport equipment, paramedical services, motorcycle, dental services, and bicycles.

READ: Cost of data subscription reduces by over 50% in 2020

Worst hit states

  • In the month of December 2020, Bauchi State recorded the highest inflation rate at 19.85%, closely followed by Kogi State with an inflation rate of 18.4%
  • Others include Edo (18.1%), Zamfara (17.9%), and Sokoto (17.6%)
  • In terms of food inflation, Edo State also recorded the highest rise in inflation rate with 24.1%, followed by Kogi (23.16%), Sokoto (22.2%); while Kwara and Zamfara State recorded food inflation of 22.1% and 21.7% respectively.

READ: Nigeria’s inflation expected to maintain double digit in the next one year

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Meanwhile, the urban inflation rate increased by 16.33% (year-on-year) in December 2020 from 15.47% recorded in November 2020, while the rural inflation rate increased by 15.20% compared to 14.33% recorded in November 2020.

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What this means

The rise in the consumer price index indicates that consumers spent more in the month of December compared to the previous month.

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  • This implies that the purchasing power of Nigerians is continually eroding.
  • Nigerians could be faced with new worries if the second wave of the covid-19 pandemic leads to a second round of lockdown in the country.
  • The significant increase could, however, be attributed to the Christmas and New year festivities in the month of December.

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Macro-Economic News

Nigeria’s total public debt increases by N6 trillion in 1 year

Nigeria’s total public debt stock as of September 2020, increased by over N6 trillion in just one year.

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How to avoid debt despite economic challenges

Nigeria’s total public debt stock as of September 2020, increased by over N6 trillion in just one year. This is according to the Nigerian Domestic and Foreign Debt report, recently released by the National Bureau of Statistics (NBS).

The total public debt (External and Domestic) incurred by Nigeria stood at N32.22 trillion ($84.57 billion) as of September 2020, which represents an additional N6.01 trillion when compared to N26.21 trillion recorded as of the corresponding period of 2019.

READ: Nigeria total public debt hits N31 trillion as debt service gulp over N1.2 trillion in H1 2020 

The breakdown shows that external debts accounted for 37.82% (N12.19 trillion) of the total debt stock, while domestic debts at N20.04 trillion represented 62.18% of the total.

Breakdown

  • Further disaggregation of Nigeria’s foreign debt showed that $16.74bn of the debt was multilateral.
  • Also, $502.38m was bilateral (AFD) and another $3.26bn bilateral from the Exim Bank of China, JICA, India, and
    KFW while $11.17bn was commercial which are Eurobonds and Diaspora Bonds.
  • Total external debt grew by $5.04 billion (N3.9 trillion) within the period, indicating an increase of 18.72%.
  • Total domestic debt on the other hand declined by $5.86 billion. However, it represents an increase in Naira value of N2.09 trillion, largely due to multiple devaluations of the currency during the period.

READ: Growing concern for Nigeria’s ballooning debt profile

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A cursory look at the breakdown of the domestic debts show that 73.53% (N11.65 trillion) were in form of Federal Government bonds, 17.17% (N2.72 trillion) in Treasury bills, followed by Promissory Notes accounting for 6.13% (N971.9 billion) of the total federal government domestic debts.

Others include; FGN Sukuk (N362.6 billion), Treasury Bonds (N100.9 billion), Green bond (N25.7 billion), and Savings bond (N12.6 billion).

READ: Debt burden of the least developed nations rises to $744 billion – World Bank

More loans to be expected

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On the 31st of December 2020, President Buhari signed the 2021 appropriation bill of N13.59 trillion into law, which 25.7% higher than the revised 2020 budget of  N10.8 trillion. However, the budget comes with a deficit of N5.6 trillion, which is expected to be financed mainly through borrowings both externally and domestically.

READ: Global Economy to grow by 4% in 2021 – World Bank

According to the minister of Finance, Budget, and National Planning, Dr. Zainab Ahmed, in a budget presentation on Tuesday, N2.34 trillion will be sourced each from domestic and foreign sources respectively, N709.69 billion from Multilateral/bilateral loan drawdowns, and N205.15 billion from privatisation proceeds.

READ: Analysis: Nigeria needs an austerity diet

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Recall that Nairametrics reported in December that, the World Bank finally approved a $1.5 billion loan request made by Nigeria as budget support in order to cushion the impact of the covid-19 pandemic on the country’s revenue.

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It is also worth noting that the federal government will be tapping into funds in unclaimed funds and dormant accounts.

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Macro-Economic News

PMI: Nigeria’s manufacturing sector contracts in December

The manufacturing sector relapsed in December from 50.2 index points recorded in the month of November 2020.

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Manufacturing sector in Nigeria and the reality of a "new normal"

The Manufacturing Purchasing Managers’ Index (PMI), for the month of December, witnessed a contraction, as it stood at 49.6 index points. This was disclosed in the PMI report, recently released by the Central Bank of Nigeria (CBN).

According to the report, the manufacturing sector relapsed from 50.2 index points recorded in the month of November 2020. It however, gained marginally compared to 49.4 index points recorded in October 2020.

READ: CBN report projects greater employment prospects in 2021

The report also disclosed that out of the 14 surveyed subsectors, 4 subsectors reported expansion (above 50% threshold) in the review month in the following order:

  • Transportation equipment
  • Nonmetallic mineral products
  • Paper products
  • Food, beverage & tobacco products.

READ: Frantic CBN allows diaspora remittances to be withdrawn in dollars and sold anywhere including black market

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However, textile, apparel, leather, and footwear subsector remained stationary while the remaining 9 subsectors reported contractions in the following order:

  • Primary metal,
  • Petroleum & coal products
  • Cement
  • Electrical equipment
  • Fabricated metal products
  • Printing & related support activities
  • Plastics & rubber products
  • Chemical & pharmaceutical products and
  • Furniture & related products

For context read: Nigeria’s manufacturing sector contracts for 4th consecutive month – CBN

Non-manufacturing PMI

PMI for the non-manufacturing sector stood at 45.7 points in the month of December 2020, indicating contraction in Non-manufacturing PMI for the ninth consecutive months.

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Of the 17 surveyed sub-sectors, 5 subsectors reported growth in the following order:

  • Arts, Entertainment & Recreation
  • Water supply, sewage & waste management
  • Electricity, gas, steam & air conditioning supply
  • Educational services and Professional
  • Scientific & technical services

READ: These industries appear to have returned to pre-pandemic levels

While twelve subsectors reported declines in the following order: Management of companies; Utilities; Transportation & warehousing; Real estate rental & leasing; Construction; Finance & insurance; Agriculture; Wholesale/Retail trade; Information & communication; Repair, Maintenance/Washing Of Motor Vehicles; Health care & social assistance and Accommodation & food services.

What you need to know

  • In December 2020, suppliers’ delivery time was faster, new orders and production level increased while employment level and raw materials inventories contracted.
  • The business activity index for the non-manufacturing sector contracted at 46.9 points from the expansionary level recorded in the month of November 2020.
  • The employment level Index for the non-manufacturing sector in the month of December 2020 stood at 45.1 points, indicating contraction in employment level for the ninth consecutive months.

READ: COVID-19: CACOVID spent N43.27 billion to support 3 key priorities – CBN

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What this means

PMI is a survey that is conducted by the Statistics Department of the Central Bank of Nigeria and shows the changes in the level of business activities in the current month compared with the preceding month.

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  • For each of the indicators measured, this report shows the diffusion index of the responses, which is computed as the percentage of responses with positive change plus half of the percentage of those reporting no change, except for supplier delivery time, which is computed as the percentage of responses with negative change plus half of the percentage of those reporting no change.
  • A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding. 50 points indicate that there is no change, while a PMI below 50 points indicates that it is generally contracting.
  • A contraction in manufacturing activities means that the sector is yet to recover from the covid induced downturn which crippled the manufacturing activities for 6 consecutive months before recording slight expansion in the previous month.

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