In Nige­ria In­fla­tion De­clines Fur­ther to 11.61% as US Hikes In­ter­est Rate

THISDAY - - FRONT PAGE - Ndubuisi Fran­cis in Abuja

For the 16th month, in­fla­tion rate con­tin­ued a down­ward tra­jec­tory, de­clin­ing from 12.48 per cent in April to 11.61 per cent in May.

This is just as the US Fed­eral Re­serve yes­ter­day hiked its bench­mark short-term in­ter­est rate a quar­ter per­cent­age point and in­di­cated that two more in­creases are likely this year.

The Fed pushed in­ter­est rate to a range of 1.75 per cent to two per cent and this may have neg­a­tive ef­fect on cap­i­tal flows to Nige­ria and

may com­pel the Cen­tral Bank of Nige­ria to main­tain its tight mon­e­tary pol­icy stance.

THISDAY had re­ported on Mon­day that Nige­ria’s ex­ter­nal re­serves has main­tained a sus­tained de­cline in the past three weeks as for­eign port­fo­lio in­vestors (FPI) con­tin­ued to weigh the pos­si­bil­ity that the US Fed would raise in­ter­est rate at its meet­ing yes­ter­day.

Mean­while, the lat­est in­fla­tion fig­ures re­leased by the Na­tional Bureau of Sta­tis­tics (NBS) showed that the Con­sumer Price In­dex (CPI), which mea­sures in­fla­tion stood at 11.61 per cent (year-onyear) in May 2018, say­ing, "This is 0.87 per cent points less than the rate recorded in April 2018 (13.34) per cent. "

How­ever, by this claim, the NBS in­ad­ver­tently con­tra­dicted it­self, hav­ing put the in­fla­tion rate for April at 12.48 per cent last month, con­trary to its lat­est re­port al­lud­ing to April in­fla­tion rate as 13.34 per cent.

But a closer look at the info graph con­tained in the re­port re­flected the ac­cu­rate rate for April.

The sta­tis­ti­cal agency stated that in the May fig­ures, in­creases were recorded in all Clas­si­fi­ca­tion of In­di­vid­ual Con­sump­tion by Pur­pose (COICOP) di­vi­sions that yield the head­line in­dex.

COICOP is a clas­si­fi­ca­tion and anal­y­sis of in­di­vid­ual con­sump­tion ex­pen­di­tures in­curred by house­holds, non-profit in­sti­tu­tions serv­ing house­holds and gov­ern­ment ac­cord­ing to their pur­pose.

It in­cludes cat­e­gories such as cloth­ing and footwear, hous­ing, wa­ter, elec­tric­ity.

On a month-on-month ba­sis, the Head­line In­dex in­creased by 1.09 per cent in May 2018, up by 0.26 per­cent­age points over the rate recorded in April 2018.

The per­cent­age change in the av­er­age com­pos­ite CPI for the 12 months pe­riod end­ing May 2018 over the av­er­age of the CPI for the pre­vi­ous 12 months pe­riod was 14.79 per cent, in­di­cat­ing a 0.41 per­cent­age point de­cline from 15.20 per cent posted in April 2018.

The com­pos­ite food in­dex rose by 13.45 per cent in May 2018.

This rise in the in­dex was caused by in­creases in prices of pota­toes, yam and other tu­bers, veg­eta­bles, fish, bread and ce­re­als, fruits and meat.

On month-on-month ba­sis, the food sub-in­dex in­creased by 1.33 per cent in May 2018, up by 0.42 per­cent­age points from 0.91 per cent recorded in April.

The av­er­age an­nual rate of change of the food sub-in­dex for the 12-month pe­riod end­ing May 2018 over the pre­vi­ous 12-month av­er­age was 18.36 per cent, 0.53 per­cent points from the av­er­age an­nual rate of change recorded in April (18.89) per cent.

The ''all items less farm pro­duce'' or Core in­fla­tion, which ex­cludes the prices of volatile agri­cul­tural pro­duce stood at 10.7 per cent in May 2018, down by 0.2 per cent from the rate recorded in April (10.9) per cent.

On month-on-month ba­sis, the core sub-in­dex in­creased by 0.98 per cent in May 2018.

This was up by 0.11 per cent when com­pared with 0.87 per cent recorded in April.

The high­est in­creases were recorded in prices of hair­dress­ing saloons and per­sonal groom­ing es­tab­lish­ment, ve­hi­cle spare parts, fu­els and lu­bri­cants for trans­port equip­ment, books and sta­tionery, do­mes­tic ser­vices and house­hold ser­vices, phar­ma­ceu­ti­cal prod­ucts, paramed­i­cal ser­vices, medical ser­vices and pas­sen­ger trans­port by road.

The av­er­age 12-month an­nual rate of change of the in­dex was 11.83 per cent for the 12-month pe­riod end­ing May 2018; this is 0.19 per cent points lower than 12.02 per cent recorded in April.

Also, all items in­fla­tion on year on year ba­sis was high­est in Kebbi (14.65 per cent), Yobe (13.68 per cent) Ji­gawa

(13.62 per cent), while Kwara (8.87 per cent), Kogi (9.07 per cent) and Delta (9.22 per cent) recorded the slow­est rise in head­line year- on -year in­fla­tion.

Month-on-month ba­sis how­ever, May 2018 all items in­fla­tion was high­est in Adamawa (1.98 per cent), Kwara (1.79), and Kaduna (1.70 per cent), while Kogi (0.02 per cent), La­gos and Ogun (0.52 per cent) and Cross River (0.56 per cent) recorded slow­est rise on a month- on-month all item ba­sis in May 2018.

In May 2018, food in­fla­tion on a year-on-year ba­sis was high­est in Yobe (15.86 per cent), Kebbi (15.62 per cent) and Ji­gawa (15.56 per cent), while Kogi (8.54 per cent), Benue (9.93 per cent) and Akwa Ibom (11.13 per cent) recorded the slow­est rise in food in­fla­tion.

On month-on-month ba­sis, how­ever, May 2018 food in­fla­tion was high­est in Taraba (2.80 per cent), Adamawa (2.38 per cent) and Enugu (2.36 per cent), while Kogi, Oyo and Ek­iti all recorded food price de­fla­tion or neg­a­tive in­fla­tion (gen­eral de­crease in the gen­eral price level of goods and ser­vices or a neg­a­tive in­fla­tion rate) in May 2018.

The Fed­eral Re­serve hiked its bench­mark short-term in­ter­est rate a quar­ter per­cent­age point Wed­nes­day and in­di­cated that two more in­creases are likely this year.

The move pushes the funds rate tar­get to 1.75 per­cent to 2 per­cent. The rate is closely tied to con­sumer debt, par­tic­u­larly credit cards, home eq­uity lines of credit and other ad­justable-rate in­stru­ments.

In an unusu­ally terse state­ment that ran just 320 words, the Fed­eral Open Mar­ket Com­mit­tee changed mul­ti­ple phrases from its pre­vi­ous mis­sives, point­ing to a more op­ti­mistic view on eco­nomic growth and higher in­fla­tion ex­pec­ta­tions.

Though the state­ment con­tained less than half the words of some of the com­mit­tee's typ­i­cal com­mu­niques, there was a lot to un­pack in the lan­guage.

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