Nigeria inflation rose to a six-year high in May, following a disappointing data in April as the increase in transport fares and other energy prices continues to drive prices of goods and services high.
The Consumer Price Index, which measures inflation rose from 13.7 percent recorded in April to 15.6 percent in May, the National Bureau of Statistics (NBS) showed on Tuesday. The increase was as a result of the surge in the overall price level across the economy.
The report highlighted the increase in fuel prices as the main cause of the surging prices in the country, with the electricity rates and other energy prices rising 15.1 percent year-on-year in May, up by 1.7 percent from the preceding month.
The highest increases were recorded in the passenger transport by road, kerosene, fuels and lubricants for personal transport equipment and vehicle spare parts.
Early in the week, a report showed that the recent increase in the price of fuel to N145 per litre have prompt users to seek alternative or reduce their usage, a situation that has plunged sales by as much as 40 percent.
“If you may agree with me, there has been a light flow of traffic in the Lagos metropolis in very recent times. We however deem this to be the initial reaction and thus believe that the demand will improve over time,” said Mr. Akin Akinfemiwa, the Chairman of Major Oil Marketers Association of Nigeria (MOMAN) and Group Chief Executive Officer of Forte Oil Plc.
Also, gauge of foods climbed 14.9 percent year-on-year from 13.2 percent in the previous month, increase in importation cost contributed to rise in food prices as the imported food index rose the most, 18.6 percent and 2.2 percent more than what was obtained in April.
Prior to the release, Access Bank’s Economic Intelligence unit, said “Continued weakness in the Naira, following the announcement of the deregulation of the downstream petroleum sector has also placed significant pressure on the inflation rate. This will have filtered into consumer prices as some firms may have sourced scarce foreign exchange from the parallel (black) market to import intermediate goods to maintain operations.”
Rising inflation is expected to plunge investor’s returns further, while bond yields likely to rise to compensate for the inflation.
Boeing to Deliver 50 737 MAX Planes to British Airways
International Airlines Group (IAG), the owner of British Airways, on Thursday said it has agreed to purchase 50 Boeing 737 MAX planes. The transaction estimated at $6.25 billion includes a substantial discount and is expected to be delivered between 2023 and 2027, according to a statement issued by the company.
In the statement seen by Investors King, Luis Gallego, the Chief Executive of IAG, said “The addition of new Boeing 737s is an important part of IAG’s short-haul fleet renewal.”
“The deal falls short of a blockbuster non-binding commitment for 200 737 MAX jets placed under former chief executive Willie Walsh at the Paris Airshow 2019 that was a welcome lifeline to Boeing when the model was grounded after two fatal crashes.
“But the firm 737 MAX 10 order from a top-tier customer is an important signal to the market at a time when Boeing faces an increasingly high-stakes battle to win certification of the largest MAX variant before a new safety standard on cockpit alerts takes effect at year-end.”
Boeing’s financial health rests on the resumption of deliveries of 787 Dreamliners and clearing MAX inventories, company executives and analysts have said.
Former IAG’s Chief Financial Officer, Steve Gunning revealed to analysts in November that the airline group would need some additional short-haul aircraft towards 2024 or 2025 and hinted that any order would include the 737 MAX.
IAG, owner of Ireland’s Aer Lingus and Spain’s Iberia and Vueling in addition to British Airways, also has a further 100 purchase options as part of the deal, which is subject to shareholder approval.
IAG is one of the world’s largest airline groups, with a fleet of 531 aircraft. Before the impact of the COVID-19 pandemic it operated to 279 destinations and carried around 118 million passengers each year.
It is a Spanish registered company with shares traded on the London Stock Exchange and Spanish Stock Exchanges.
CISLAC Campaigns For Tobacco Tax Hike
The Federal Ministry of Health, Civil Society Legislative Advocacy Centre (CISLAC) has called for a campaign to raise tobacco tax. The aim of this advocacy is to generate income for the health sector and save the lives of Nigerians.
Executive Director, CISLAC, Mr Auwal Rafsanjani said the measure would provide Nigeria with a win-win situation by lowering tobacco product affordability while generating income for development funds. He said that the detrimental effects of tobacco usage had prompted countries such as Nigeria to enact tobacco control measures to reduce tobacco consumption and cost.
“Excise taxes are the most effective tax measure for promoting health because they change the price of a harmful product relative to other goods and can be easily increased over time. Consumption is reduced best with taxes based on specific taxes on unhealthy products such as sticks and packs of cigarettes.
“Closely linked to the issue of tobacco taxation as a control tool, is the issue of safeguarding population health. It is not news, however, that the state of health care delivery in Nigeria remained very abysmal while the world intensified efforts to attain the Sustainable Development Goals,” he said.
Recall that Investors King had earlier reported the World Bank’s call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.
Investors King gathered that, Shubham Chaudhuri, the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.
According to Rafsanjani, African nations convened in April 2001 to address health-care finance issues, which are one of the primary determinants of Universal Health Coverage (UHC), and decided to set aside 15% of their budget for health.
“As the country defaults on budgeting effectively for health, countries of the world are adopting innovative approach to mobilise resources for health financing which is adopting tobacco taxes as an alternative strategy”, he noted.
The study, according to Rafsanjani, was commissioned to investigate the potential of tobacco taxation as a form of income for Nigerian health financing.
He explained that the study’s goal was to give scientific information to help policymakers formulate better policies as Nigeria battled to close the gap in health funding.
Access Holdings Plc to Acquire Majority Stake in First Guarantee Pension Limited
Access Holdings Plc has agreed with First Guarantee Pension Limited to acquire a majority stake in the company in its drive to transform from a narrow banking business into a financial service company.
The leading financial institution stated in a press release obtained by Investors King on Thursday.
According to Access Bank, the transaction is in line with its strategy to evolve into a full-blown financial services company and gain relevant market share across Africa, global monetary centres and beyond banking verticals.
Speaking on the firm’s push to change the banking landscape, Dr. Herbert Wigwe, Group Chief Executive Officer, Access Corporation said “This transaction is a natural evolution for us. Over the last 20 years, we set our sights on and delivered ambitious plans to transform the African financial services landscape focusing on banking and have created the African leading Bank and largest bank by customer base.
“This large customer base both on the wholesale and retail segments makes the pension business a natural fit for the Corporation given its objective of ecosystem optimisation. We will leverage our well-established culture of strong corporate governance, risk management, cutting-edge technology, and digital capabilities to deliver high standards of professionalism in the management of pension assets to the benefit of our stakeholders.”
The firm added that the National Pension Commission and the Central Bank of Nigeria have given their no objection to the transaction.
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