NBS Inflation Report: Analyst Says 2017 Is Nigeria First Major Test

Report by the National Bureau of Statistics (NBS) shows Consumer Price Index (CPI) which measure inflation declined by 0.02 per cent in April.

According to the NBS in its new report, the inflation rate, put at 17.24 percent, declined a little further from the 17.26 percent recorded in March .

However, an economic and financial research analyst has tipped the figures and other indicators are presenting the year 2017 as first test for the economy in the. 

The NBS’s report represents the third consecutive month of a decline in the headline CPI rate, indicating some easing in high food and non-food prices.

According to the report, the top items to have recorded the highest increases between April 2016 and 2017 across all the divisions were Solid Fuels, Bread and Cereals, Meat, Liquid Fuels, Clothing materials, other articles of clothing and clothing accessories, and Fish.

Between March and April 2017, however, the headline index increased by 1.60 per cent in April 2017, 0.12 per cent points lower than the rate recorded in March. Similarly, between March and April 2017, the highest rise in prices were dominated by food items including coffee, tea and cocoa, potatoes, yam and tubers, bread and cereals, milk cheese and eggs and meat and fish.

The headline index, the report noted, is made up of the core index and farm produce items. Similarly, the urban index rose by 1.61 per cent in April from 1.76 percent recorded in March, while the rural index rose by 1.59 percent in April from 1.69 percent in March.

The Composite Food Index rose by 19.30 per cent in April 2017. Meanwhile, the food sub-index increased by 2.04 per cent in April, down by 0.17 per cent points from 2.21 per cent recorded in March.

The rise in the index was caused by increases in prices of bread, cereals, meat, fish, potatoes, yams and other tubers, coffee, tea and cocoa, milk cheese and eggs and oils and fats.

The average annual rate of change of the Food sub-index for the twelve-month period ending in April 2017 over the previous twelve-month average was 17.11 percent, 0.51 percent points from the average annual rate of change recorded in March (16.60) percent.

The ‘’All Items Less Farm Produce’’ or Core sub-index, which excludes the prices of volatile agricultural produce eased by 14.80 percent during the month, 0.60 percent points from 15.40 percent recorded in March as all key divisions which contributes to the index increased.

Commenting on the report, Lukman Otunuga, FXTM Research Analyst said that the improving sentiment towards the Nigerian economy boosted further on Tuesday following reports of the nation’s inflation declining for a third consecutive month in April at 17.24%.

“This visible display of price stability has boosted investor confidence towards the nation with the Nigerian Stock Market marching into gains and becoming a champion among its emerging market peers.

“With the Nigerian parliament recently approving the government’s seven trillion naira budget to revive the economy, the overall outlook is starting to look quite encouraging in the longer term with 2017 acting as the first major test. A vulnerable Dollar continues to offer some support to the Nigerian Naira with the local currency set to gain further ground if the Dollar continues to weaken. Investors may direct their attention towards Nigeria’s pending GDP report issued this Thursday which could boost confidence towards the nation’s economic recovery if Q1 growth exceeds estimates”.