Inflation rate unchanged at 10.5 percent in November

The country’s inflation rate remained unchanged at 10.5 percent in November, latest Composite Consumer Price Index (CPI) and Inflation Report by the National Bureau of Statistics (NBS) for the month has revealed.

The figure rose from 10.3 percent last September after the initial level of 9.3 percent it attained in August.

The Report published today indicated that the intervention by the Central Bank of Nigeria (CBN) and other financial system regulatory authorities to control and keep the inflation rate at a single digit level for the year may not have yielded any significant impact on the year-on-year level in the fourth quarter of the year.

In spite of the seeming stability in the inflationary trend, the rate was higher than the previous levels in September and August, details showed that there was a sharp increase in the prices of some imported food items, with potential inflationary impact, though it was moderated by lower prices of some locally produced food items occasioned by the prevailing harvest season.

The report attributed high prices of food and non-alcoholic beverages, clothing, footwear, kerosene, diesel and transport as the biggest contributors to the month’s increase in year-on-year (Y-o-Y) CPI and inflation rate.

Similarly, the report noted that prices of some food commodities across the country also stabilised relative to the previous month’s price trend, while the ‘All Items’ composite index and the inflation rate experienced some moderation given the high computation weight of the overall food items account for relative to imported commodities.

“The Composite Consumer Price Index (CPI), which measures inflation, rose to 10.5 per cent year-on-year in November 2011. This is the same as 10.5 per cent recorded in the previous month,” the report said, adding that the monthly composite CPI was stable when compared with October 2011, though with a slight increase of 0.04 percent.

Shading more light on the CPI, with regard to the percentage change in the average composite CPI for the 12-month period ended November 2011 over the average of the CPI, the report puts that change at 11%, attributing it to a slightly lower than the corresponding 12-month average percentage change for urban and rural indices of 8.5 percent and 13 percent respectively.

The ‘All Items’ year-on-year change in consumer price level for urban and rural dwellers rose by 7.4 percent and 13.1 percent  respectively. Specifically, the urban ‘All Items’ monthly index rose by 0.1 percent on a month-on-month basis,  while comparatively the rural index remained stable with the level attained in October.

A further analysis of the food inflation trend, according to the statistical data management office, revealed that the average monthly food prices rose slightly in the month under review by 0.3 percent when compared with the October figure, while the CPI on a year-on-year period ended November 2011, was higher by 9.6 percent, which is lower than the 9.7 percent recorded in the preceding month.

As part of its effort to push inflationary rate to a single digit, the apex bank at its extra-ordinary Monetary Policy Committee (MPC) meeting in Abuja, took a number of measures aimed at arresting the lagging effect of the naira, which slumped 7.8 percent against the dollar since the beginning of August, as well as contend with the pressure on inflation as the government prepares to remove subsidies in petroleum products next year.

Apart from maintaining the current symmetric corridor of +/-200 basis points around the monetary policy rate (MPR), the MPC raised lending rate by 275 basis points from 9.25% to 12 percent, while the Cash Reserve Ratio (CRR) was increased from 4 percent to 8 percent from the maintenance period beginning from October 11, 2011.

The CBN governor, Lamido Sanusi, said monetary policy had to bear the greater burden of economic adjustment in the face of declining oil prices, declining foreign reserves, increasing demand for foreign exchange, fiscal dominance and capital flow reversals.