Inflation settles at 9% in May

Nigeria’s inflation as measured by the consumer price index (CPI) stayed at 9 percent in May, a little lower than the 9.1 percent April level, thanks to food and core indices which dropped slightly from April records.

The National Bureau of Statistics (NBS) said the composite food index at 9.3 percent fell 0.7 percentage points lower than the 10 percent recorded in April.

Food prices, however, continue to exhibit increases across all classes in the food sub-index largely due to dwindling supplies in face of a relatively stable demand, the data office added.

In May, prices rose the highest in the meats, oils and fats, potato, yams and other tubers classes.

The increase in food prices captured by the food sub-index, while significant, are also lower year-on-year. “..The food sub-index indicates a slower rate of increase in food prices in May relative to April”.

Through the first five months of 2013, the food sub-index has averaged 10 percent, 1.8 percent lower than rates recorded over the same period last year.

Relative to April, the rise in the headline index could be attributable to higher prices in all 12 COICOP divisions, NBS said.

The “All items less Farm Produce” or core index, which excludes the prices of volatile agricultural products recorded at 6.2 percent year-on-year, was lower than the 6.9 percent recorded in April by 0.7 percentage points.

This is the third consecutive month of muted year-on-year changes in the core sub-index due to base effects. On a month-on-month basis, the core index increased by 0.5 percent from April to May.

The highest price increases were observed in household appliances, pharmaceutical prices, non-durable household goods, clothing and foot ware and shoes prices.

The year-on-year changes in the core index for the rest of the year are likely to be muted as a result of substantially higher price levels this time last year, according to the bureau.

Several forecasts suggest that Nigeria could keep inflation low at single digits in 2013.

The Central Bank of Nigeria (CBN) said at its last Monetary Policy Committee meeting in May that inflation outlook remains relatively benign with projections of headline inflation remaining in the single digit range for the next six months leading to muted growth in the monetary aggregates and exchange rate stability.

This result, it noted, reflects a combination of base effect and the success of tight monetary policy.

However, it fears that the principal risks to the outlook remain fiscal spending and possible pressures on the exchange rate from any attrition to reserves caused by declining revenues as a result of output leakages.