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Macro-Economic News

Nigeria’s inflation hits 16.47% as food prices soar to record high

Nigeria’s inflation rate rose to 16.47% (year-on-year) in January 2021 as against 15.75% recorded in December 2020.

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Nigeria’s consumer price index, (CPI) which measures inflation increased by 16.47% (year-on-year) in January 2021. This is 0.71% points higher than the rate recorded in December 2020 (15.75%).

This is according to the latest Consumer Price Index report, released by the National Bureau of Statistics.

According to the report, Nigeria’s headline inflation has risen to its highest in over three years while food inflation rose to its highest since July 2008, when it stood at 20.9%.

On a month-on-month basis, the Headline index increased by 1.49% in January 2021. This is 0.12% points lower than the rate recorded in December 2020 (1.61%).

Food inflation

The food index rose sharply to a record high to stand at 20.57% in January 2021 compared to 19.56% recorded in the previous month.

  • On a month-on-month basis, the food sub-index increased by 1.83% in January 2021, down by 0.22% points from 2.05% recorded in December 2020.
  • The rise in the food index was attributed to increases in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, vegetables, Fish and Oils and Fats.

Core inflation

The “All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce stood at 11.85% in January 2021, up by 0.48% when compared with 11.37% recorded in December 2020.

  • On a month-on-month basis, the core sub-index increased by 1.26% in January 2021. This was up by 0.16% when compared with 1.10% recorded in December 2020.
  • The highest increases were recorded in prices of Passenger transport by air, Medical services, Hospital services, Passenger transport by road, Pharmaceutical products, Paramedical services.
  • Others include; Repair of furniture, Vehicle spare parts, Motor cars, Miscellaneous services relating to the dwelling, Maintenance, and repair of personal transport equipment.

Worst hit states

Kogi States led the list of states with the highest inflation rate in January 2021 with 21.38%.

  • Closely followed by Oyo State with 20.17%, Bauchi (19.52%), Ebonyi (18.74%), and Benue State (18.33%).
  • On the other hand, Cross River recorded the lowest at 12.22% followed by Abuja (12.94%), Kwara (13.96%), Abia (14.03%), and Enugu (14.26%).
  • In terms of food inflation, Kogi State also recorded the highest at 26.64%, followed by Oyo State (23.69%).
  • Others on include; Rivers (23.49%), Benue (22.97%), and Kwara (22.76%).
  •  It is worth noting that in analysing price movements under this section, note that the CPI is weighted by consumption expenditure patterns which differ across states.
  • Accordingly, the weight assigned to a particular food or non-food item may differ from state to state making interstate comparisons of consumption basket inadvisable and potentially misleading.

Meanwhile, the urban inflation rate rose to 17.03% (year-on-year) in January 2021 from 16.33% recorded in December 2020, while the rural inflation rate stood at 15.92% in January 2021 compared to 15.20% recorded in December 2020.

What this means

The rise in the consumer price index indicates that consumers spent more in the month of January compared to December, despite the high spending that December is naturally known for.

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This also implies that Nigeria is yet to recover from the downturn caused by the covid induced lockdown as well as the closure of land borders in 2019.

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Macro-Economic News

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.

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Transport fare for motorcycle "Okada" more than doubled in 2020, Lagos State bans Gokada, ORide, MaxNG, others from 15 local governments 

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.

READ: Transport Fare: Motorcycle “Okada” commuters paid more in November

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).

READ: Transport fare for motorcycle “Okada” more than doubled in 2020

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.

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Macro-Economic News

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.

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parallel market, Covid-19: N3.5 trillion disbursed as stimulus package for the Nigerian economy, CBN Vs NESG: Waving the white flag for the benefit of Nigerians, Exchange Rate Unification: CBN devalues official rate to N380/$1, Nigerian banks have written off N1.9 trillion impaired loans in past 4 years, CBN sandbox operations, Stirling Trust Company Limited, Key highlights of the October 2020 Business Expectations Survey Report, A Total of N3.5 trillion was disbursed in the wake of the COVID-19 pandemic, in addition to several other interventions to reflate the economy - CBN, BOFIA 2020: Steps forward or backwards for Nigerian banks, Total credit to the economy rose to N19.54trillion – CBN Governor

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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