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%).
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.
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.
- 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.
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.
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.
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.
- 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.
Transport fare watch: Motorcycle “Okada” commuters paid less in January 2021
Commuters on motorcycle per drop (Okada) paid less in January 2021 than they did in December 2020.
The average fare paid by commuters for journey by motorcycle per drop decreased by 11.60% month-on-month and increased by 95.22% year-on-year to N259.33 in January 2021 from N293.36 in December 2020, according to the National Bureau of Statistics (NBS) report for the month of January 2021.
According to the report, commuters in Taraba (N400.80), Yobe (N400.15) and Rivers (N400.00) paid the highest journey fare by motorcycle per drop while commuters in Adamawa (N84.22), Katsina (N134.90) and Kebbi (N152.05) paid the lowest journey fare by motorcycle per drop.
Other key highlights
- The average fare paid by commuters for bus journey intercity decreased by 0.25% month-on-month and increased by 39.55% year-on-year to N2,346.41 in January 2021 from N2,352.19 in December 2020.
- Commuters in Abuja FCT (N4,482.24), Lagos (N3,300.23) and Sokoto (N3,300.00) paid the highest bus journey fare intercity while commuters in Bayelsa (N1,600.45), Bauchi (N1,640.20) and Enugu (N1,687.45) paid the lowest bus journey fare within city.
- The average fare paid by commuters for bus journey within the city decreased by 0.66% month-on-month and increased by 74.75% year-on-year to N352.15 in January 2021 from N354.49 in December 2020.
- Commuters in Zamfara (N600.00), Bauchi (N522.75) and Ekiti (N458.77) paid the highest bus journey fare within city while commuters in Oyo (N189.46), Abia (N205.22) and Borno (N240.79) paid the lowest bus journey fare within city.
- The average fare paid by air passengers for specified routes single journey increased by 0.02% month-on-month and by 18.27% year-on-year to N36,463.65 in January 2021 from N36,454.59 in December 2020.
- Passengers in Anambra (N38,600.00), Cross River/Jigawa/Lagos (N38,500.00), Bauchi (N38,400.00) paid the highest airfare while States with lowest airfare were Akwa Ibom (N32,450.00), Sokoto (N33,700.00), and Gombe (N35,000.00).
- The average fare paid by passengers for water way passenger transport increased by 3.68% month-on-month and by 38.58% year-on-year to N786.19 in January 2021 from N758.27 in December 2020.
- Passengers in Rivers (N2,280.00), Delta (N2,250.45) and Bayelsa (N2,200.10) paid the highest fare by water while states with lowest fare by waterway passenger transport were Borno (N245.10), Gombe (N290.77) and Kebbi (N340.00).
Why this matters
Transportation cost takes a huge portion of budget for most lower/middle-class Nigerians and as well takes not less than 20% of their take-home pay packages.
The drop in fares paid by the commuters on motorcycle per drop (Okada) is a welcome development.
Transport by motorcycle (Okada) has been popularly adopted in most cities by businessmen, government workers, and students to overcome traffic congestion, and for the advantage that it can navigate roads that are inaccessible to automobiles and buses, particularly in villages and urban slums.
The moment Emefiele predicted Nigeria will be out of recession in Q4 2020
The CBN Governor had expressed optimism last year that the country was going to come out of recession in Q4 of 2020.
It is no longer news that Nigeria, Africa’s largest economy, against all expectations exited recession as its Gross Domestic Product (GDP) grew by 0.11% in the last quarter of 2020 (year on year).
However, the Governor of the Central Bank of Nigeria, Godwin Emefiele, had expressed optimism last year that the country was going to come out of recession in the fourth quarter of 2020.
According to the report released by the National Bureau of Statistics (NBS), this is the first positive quarterly growth in the last 3 quarters following growth in telecommunications and agriculture which seem to make up for the sharp drop in oil prices and production.
The surprising rebound of the Nigerian economy is coming against the prediction of the country’s Minister for Finance, Budget and National Planning, Zainab Ahmed, who while speaking at the 26th Nigerian Economic Summit, said that Nigeria is expected to exit recession by the first quarter of 2021.
The CBN Governor had during the November 2020 Monetary Policy Committee meeting, predicted that the country was going to come out of recession by the fourth quarter of 2020.
This as he said that many analysts expressed doubts about that and were waiting to prove him wrong.
In a video during a press conference as seen by Nairametrics, Emefiele said, “You said that in November MPC, I was cautiously optimistic that fourth-quarter GDP will be positive thereby taking Nigeria out of a recession that I was aggressively optimistic that during the first quarter, we will exit recession. I am praying very seriously that my prayer should be heard because I know that people are waiting to put my neck on the chopping board to say that I do not know my work.’’
What you should know
- Despite Nigeria’s surprise exit from recession, experts have still expressed their reservations about the country’s weak economy which is faced with several challenges for businesses ranging from foreign exchange pressure, high unemployment level, increasing consumer prices, serious security challenges, weak investor confidence, etc.
- This is as the growth in GDP was primarily driven by the Information and Communication sector and the Agricultural sector.
- However, the surprise rebound of the economy means that Nigeria may recover faster than expected as crude oil prices and production increase this year.
- This also shows that the country needs to redouble its efforts in the growth of the non-oil sector which contributed 94.13% to Nigeria’s GDP.
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