February inflation in 13-month low as food prices drop

Nigeria’s inflation eased to 14.33, year-on-year in February 2018, making it the 13th consecutive disinflation (slowdown in the inflation rate though still positive) since January 2017. This was fueled by the decline in the prices of food and petrol in the period under review.

“The cost push factors that led to the rise in inflation in 2016 such as forex scarcity and transport costs have been easing albeit slowly but continues to ease thereby leading to a slowdown in the rate of price increases for food and non food items,” Yemi Kale, Statistician General of the state-funded NBS told BusinessDay in a tweeted response on March 14.

 

The slowdown in the rate was 0.8 percent points less than the 15.13 percent recorded in the previous month, and on a month-on-month comparison, the Headline index increased by 0.79 percent in February 2018, down by 0.01 percent points from the 0.80 percent points  recorded in January, as compiled from the National Bureau of Statistics (NBS) report.

 

The Food Index increased by 17.59 percent year-on-year in February, down by 1.33 percent points from 18.92 percent rate recorded in January 2018.

 

The rise in the index was caused by increases in prices of Bread and cereals, Milk, cheese and egg, Potatoes, yam and other tubers, Fish and Vegetables, Coffee, tea and cocoa.

On a month-on-month basis, the Food sub-index increased by 0.85 percent in February 2018, down by 0.02 percent points from 0.87 percent recorded in January.

 

The average annual rate of change of the Food sub-index for the twelve-month period ending February 2018 over the previous twelve month average was 19.52 percent, 0.1 percent points from the average annual rate of change recorded in January (19.62 percent).

 

 

Meanwhile, a previous report by the NBS revealed the average price paid by consumers for premium motor spirit, or petrol, as it is popularly called for the month of February was down by 9.6 percent from N 190.9 in January to N172.5 in February 2018.

 

Though the maximum price of petrol is capped at N145 per litre by the government, but NBS figures show Nigerians bought the product at an average price N172.5 in the month under review, N18.4 less than what the price of petrol was sold on the streets in January 2018.

 

“The ease in the inflation rate is majorly driven by base effect, slower growth in food crisis and the fact that, to some extend there was sufficient supply of petrol in February compared to three months ago, are also the forces behind the inflation figures recorded in the month,” Ayo Akinwunmi, Head of Research  at FSDH Merchant Bank told BusinessDay by phone.

 

The Consumer Price Index (CPI) measures the average change over time in prices of goods and services consumed by people for day- to- day living and as such, the CPI measures inflation and

Inflation on the other hand is the rate at which the general level of prices for goods and services is rising.

 

The highest inflation increases were recorded in prices of Fuel and lubricants for personal transport equipment, Maintenance and repair of personal transport equipment, Narcotics, Vehicle spare parts, Passenger transport by air, Clearing, repair and hire of clothing, Hospital services, Domestic services and household services and Glassware, tableware and household utensils

 

“Evidently a rise in inflation especially when it’s higher than rate of growth in household incomes and/or household investments clearly weakens consumer demand and their overall wellbeing so a slow down even if marginal will defiantly be positive for individuals and businesses,” Kale said

 

A further break down of the NBS report revealed the record of increases in all the Classification of Individual Consumption by Purpose (COICOP) divisions that yield the Headline Index.

 

The percentage change in the average composite CPI for the twelve month period ending February 2018 over the average of the CPI for the previous twelve month period was 15.93 percent, showing 0.29 percent point lower from 16.22 percent recorded in January 2018.

 

 

The average 12 month annual rate of change of the index was 12.67 percent for the twelve-month period ending February 2018; this is 0.34 percent points lower than 13.01 percent recorded in January.

 

Price movements recorded by All Items less farm produce or Core sub-index increased by 11.7 percent (year-on-year) in February 2018, down by 0.4 percent points from the rate recorded in January (12.10) percent.

 

The Urban inflation rate rose by 14.76 percent (year-on-year) in February 2018 from 15.56 percent recorded in January, while the Rural inflation rate also eased by 13.96 percent in February 2018 from 14.76 percent in January.

 

On month-on-month basis, the urban index rose by 0.82 percent in February 2018, down by 0.01 from 0.83 percent recorded in January, while the rural index also rose by 0.77 percent in February 2018, showing no difference with the rate recorded in January.

 

The corresponding twelve month year-on-year average percentage change for the urban index is 16.24 percent in February 2018. This is less than 16.55 percent reported in January, while the corresponding rural inflation rate in February 2018 is 15.64 percent compared to 15.89 percent recorded in January.

 

The “All Items less Farm Produce” or Core inflation, which excludes the prices of volatile agricultural produce is 11.7 percent in February 2018, down by 0.4 percent points from the rate recorded in January (12.10) percent.

On a month-on-month basis, the Core sub-index increased by 0.75 percent in February 2018, this was up by 0.07 percent when compared with 0.68 percent recorded in January.

 

On the inflation rate in various states across the country, all items inflation on a year on year basis was highest in Kebbi with 18.60 percent, Bauchi (17.68 percent) and Yobe (17.65 percent), while Delta (11.74 percent), Edo (12.33 percent) and Kogi (12.74 percent) recorded the slowest rise in headline Year on Year inflation.

 

On a month on month basis however, February 2018 all items inflation was highest in Kebbi (1.90percent), Yobe (1.72 percent) and Rivers (1.58 percent), while Ebonyi and Nasarawa recorded price deflation on a month on month all item basis in February 2018.

 

While food inflation on a year on year basis was highest in Kwara (23.52 percent), Yobe (22.37 percent) and Kebbi (21.82 percent), while Bauchi (12.82 percent), Anambra (13.53 percent) and Benue (13.83 percent) recorded the slowest rise in food inflation.

 

On a month on month basis however, February 2018 food inflation was highest in Kebbi (2.58 percent), Yobe (2.07 percent) and Niger (1.94 percent), while Abuja, Ebonyi. Enugu, Kogi Nasarawa, Plateau and Taraba 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 February 2018.