A sharp rise in the average open market price of petrol to N191 per litre in filling stations across Nigeria failed to have an impact on inflation rate in January, figures released by the National Bureau of Statistics (NBS) Wednesday show.
Though the maximum price of Premium Motor Spirit or petrol, as it is popularly called, is capped at N145 per litre by the government, but NBS figures show Nigerians bought the product at an average price of for N190.9 in January, N19 higher than what the price petrol was sold on the streets in December 2017.
The average price paid by consumers for petrol increased by 28.4 percent year-on-year and 11.1 percent on month-on-month basis. This is despite the fact that the government is incurring an average subsidy of about N40 per litre for the product. This subsidy is obviously not getting to the average Nigerian on the street.
The NBS report shows that petrol was most expensive in Osun, Abia and Benue states, with the following prices, respectively, N228.89, N227.50 and N223.33, while states with the lowest average price of petrol were Zamfara (N159.12), Gombe (N157.73) and Kogi (N152.83).
But the high petrol prices did not lead to acceleration in inflation rate in January, as headline inflation rate declined for the 12th consecutive month, while food inflation declined to its lowest levels in 10 months, the data show.
Headline inflation dropped slightly by 0.24 percent in January 2018 to 15.13 percent from 15.37 percent recorded in December 2017. This makes it the 12th consecutive slowdown in the headline year-on-year inflation since January last year
Also, from 19.42 percent in December 2017, Nigeria’s food inflation decelerated in January to 18.92 percent, the lowest in 10 months as prices of locally produced food items moderated, the NBS also notes.
“The rise in the food index was caused by increases in prices of imported food in general as well as bread and cereals, milk, cheese and eggs, vegetables, fish, coffee and cocoa, meat, potatoes, yam, and other tubers and oil and fats.
“The Food Index increased by 18.92 percent (year-on-year) in January 2017, down from the rate recorded in December (19.42 percent),” the statistics office states.
“Food inflation is mostly affected by farming season which are either farming or harvesting periods. Until we see a sharp difference or reduction in price of food, energy or transportation the people will not feel the impact of the reduction,” Dolapo Ashiru, CEO, MegaCapital Financial Services Limited.
Ashiru urged the government to be more purposeful in its spending on infrastructure and drive the growth of the non-oil sector.
The NBS report shows further that on a month-on-month basis, the Food sub-index is actually accelerating by 0.87 percent in January 2018, up by 0.29 percent from 0.58 percent recorded in December.
“Government intervention in agricultural sector is yet to be pronounced as expected due to low level of production of food, high level of productivity will be achieved with more capital investment in the sector. All year continuous farming should be welcomed by investing in irrigation practices,” Johnson Chukwu, CEO Cowry Asset Management Limited explained in an interview with BusinessDay.
On a month-on-month basis, the Headline inflation index increased by 0.80 percent in January 2018, 0.21 percent points higher from the rate of 0.59 percent recorded in December 2017.
While urban inflation declined to 15.56 percent in January 2018 from 16.78 percent recorded in December 2017, rural inflation rate also eased by 14.76 percent in January 2018 from 15.02percent in December 2017.
On month-on-month basis, the urban index rose by 0.83 percent in January 2018, up by 0.17 from 0.66 percent recorded in December 2017, while the rural index also rose by 0.77 percent in January 2018, up by 0.23 when compared with 0.54 percent in December 2017.
On the other hand, core inflation, which excludes the prices of volatile agricultural remained unchanged at 12.10 percent, similar to rate recorded in December 2017.
On a month-on-month basis, the Core sub-index increased by 0.68 percent in January 2018, higher from 0.51 percent recorded in December.
NBS explained that the highest increases in prices were recorded in prices of Fuel and lubricants for personal transport and transport equipment, vehicle spare parts, accommodation services, maintenance and repair of personal transport equipment, appliances articles and products for personal care, hotels and restaurants, hairdressing salons and personal grooming establishments, clothing materials and other articles of clothing, garments, nondurable household goods and solid fuels.
The report shows that the states with the highest inflation rate on a year on year basis was Kebbi followed by Nassarawa with 18.55 percent and 18.49 percent respectively, while Anambra recorded the lowest with 13.34 percent.
Cynthia Egboboh, Abuj,a and Dipo Oladehinde, Lagos
