Nigeria’s inflation rises to 9 per cent in May

The inflation rate for the month of April stood at 9.1 percent. 

Nigeria’s Consumer Price Index, CPI, the index which measures the nation’s inflation, rose by 9.0 per cent year-on-year in May (slightly below the 9.1 per cent rate recorded in April), the National Bureau of Statistics has said.

The Bureau said, in May, the composite CPI increased by a faster rate than that recorded in April, as the index increased by 0.67 per cent (compared to the 0.5 per cent in April).

“Year-on-year, rates continue to hold below single digits as observed since the beginning of the year. The Core sub-index continues to show a muted rise due to base effects,” the Bureau said in its CPI report for May 2013.

The Bureau stated that as it highlighted in the April 2013 CPI Report, 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.

“The increase in food prices captured by the Food Sub-index, while significant, are also lower year-on-year. Through the first five months of 2013, the Food Sub-index has averaged 10.0 per cent, 1.8 per cent lower than rates recorded over the same period last year,” it stated.

Relative to April, the Bureau said rise in the headline index could be attributable to higher prices in all 12 Classification of Individual Consumption according to Purpose (COICOP) divisions. Higher prices were also reflected in the Food and Core sub-indices.

“All divisions (except the Food and Non-Alcoholic Beverages) rose faster than levels exhibited in April. This is also reflected in the faster month-on-month rates in the Core sub index in May vis-à-vis April. On the other hand, the Food Sub-index indicates a slower rate of increase in food prices in May relative to April,” the Bureau said.

Highlights

On a month-on-month basis, the Urban All-item index increased in May by roughly the same rate as recorded in April (0.6 per cent), while the Rural All Items index increased from levels recorded in April by 0.5 per cent.

The highest price increases were observed in household appliances, pharmaceutical prices, non-durable household goods, clothing, and footwear and shoes prices, according to the Bureau. The average 12 month annual rate of rise of the index was recorded at 11.5 per cent for the twelve-month period ending in May 2013, down by 0.8 percentage points from the 12.3 per cent recorded in April 2013.

The composite Food Index increased year-on-year by 9.3 per cent to 146.4 points in May, 0.7 percentage points lower than the 10.0 per cent recorded in April. The report stated that the Food index increased by 0.5 per cent between April and May.

“Again, food prices continue to exhibit increases across all classes in the food sub-index largely due to dwindling supplies in face of a relatively stable demand. In May, prices rose the highest in the Meats, Oils and Fats, and Potato, Yams and Other Tubers classes,” the Bureau said.

Renaissance Capital, an investment bank, analysing the figures, said May’s inflation of 9.0 per cent was slightly below its 9.1 per cent projection but in line with the consensus expectation.

“This slowdown was largely due to softer food inflation. Food inflation slowed to 9.3 per cent YoY in May, from 10.0 per cent YoY in April. However, non-food inflation picked up in May to 8.6 per cent YoY, from 8.1 per cent YoY in the previous month, by our estimate of the measure which does not account for population weights” the firm said, highlighting that the increase in non-food inflation was broad-based (across most non-food items). The housing and utilities category has the highest rate of inflation – 12.5 per cent YoY in May, up from 12.0 per cent YoY in April.

“We expect the commencement of the early harvest of maize and yams in the southern region to help contain food inflation in third quarter 2013. However, this may be partly countered by the negative impact on food production of the state of emergency in three north-eastern states. We also expect non-food inflation in the near term to come under some upside pressure from naira weakness. Given the upside risks to prices, we think inflation has bottomed and will begin to edge upwards in mid-2013, albeit moderately,” it said.

The firm said it expects the monetary policy rate (MPR) to be kept unchanged at 12.0 per cent at July’s Monetary Policy Committee (MPC) meeting. Renaissance capital said the nation’s upside risk to rates has increased.


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