- Inflation Rate Predicted to Reduce Further in April
The year-on-year inflation rate has been predicted to drop further in April.
According to analysts at FSDH Merchant Bank Limited, the Consumer Price Index (CPI) is anticipated to drop to 17.11 per cent in April, from the 17.26 per cent recorded in the month of March 2017. FSDH Merchant, which stated this in its latest inflation forecast noted that although it noticed increases in the prices of food and non-food classification for the fourth consecutive month, the base effect in the CCPI in April 2016 will be responsible for the drop in the inflation rate.
Based on the data release calendar on the National Bureau of Statistics (NBS) website, the bureau is expected to release the inflation rate for the month of April 2017 next week.
“Our analysis indicates that the value of the naira appreciated at the inter-bank market, while it depreciated at the parallel market. The naira gained by 0.16 per cent at the inter-bank market to close at US$/N305.85 while it lost 0.25 per cent at the parallel market to close at US$/N396 at the end of April.
“The fall in the international prices of food helped to counter the effect of the depreciation in the value of the naira at the parallel market. The appreciation of the naira in the inter-bank market and the drop in the prices of food at the international market led to a moderation in the prices of consumer goods in Nigeria,” the firm added.
It further stated that its model indicated that the general price movements in the consumer goods and services in April 2017 would increase the Composite Consumer Price Index (CCPI) to 226.01 points, representing a month-on-month increase of 1.48 per cent.
Similarly, the Economic Intelligence Group of Access Bank Plc has estimated that inflation rate (year-on-year) to trend downwards. But the bank in a report predicted 17.05 per cent in April 2017, from the 17.3 per cent posted in March 2017.
“As usual, our methodology adopts an autoregressive analysis of past prices, while it recognises all the assumptions used by the NBS in its computation of monthly CCPI. The expected moderation in inflation is chiefly attributable to an anticipated downward movement in the food and core sub-indexes.
“Price movements for major commodity groups in the food basket, which makes up over half of the CPI basket, remained muted in April. Based on an independent survey, vegetable oils, rice, and flour trended downwards, while the price of garri, potatoes and noodles were stable.
“Core inflation, which excludes the prices of volatile agricultural produce, is expected to extend its downward trend in April. This partially reflects the effects of currency appreciation in the parallel market. Month-on-month, the naira appreciated by 8.32 per cent as the Central Bank maintained the tempo of interventions in the forex market.
The monthly Food Price Index (FPI) that the Food and Agriculture Organisation (FAO) released recently showed that the Index averaged 168 points, 1.84 per cent lower than the revised value for March 2017, but 9.93 per cent higher than the April 2016 figure.
According to the FAO, sugar prices dropped the most, vegetable oils, dairy and cereal prices also declined. However, prices of meat continued to trend upward since the beginning of the year. The continued weak global import demand and improved supply conditions in the main sugar producing regions continued to weigh on the prices of sugar. Hence, the FAO Sugar Price Index fell by 9.07 per cent in April 2017 to a 12-month low.
The FAO Vegetable Oil Price Index was down by 3.92 per cent, driven by a fall in prices of palm and soy-oil, the key commodities in the Index.
The FAO Dairy Price Index fell by 3.28 per cent from March 2017 to April 2017. Milk powders and cheese were the main commodities affected. Butter prices on the other hand, rose amid reduced exports.
The FAO Cereal Price Index declined by 1.2 per cent from the previous month, due to the continued fall in the prices of wheat. Good production prospects in 2017/18 season continued to weigh on the prices of most cereals.
World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco
The World Bank Group has made a 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.
Shubham Chaudhuri, who is 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.
Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.
The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.
The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.
Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.
Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead
In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.
This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.
In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.
That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.
To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.
In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).
Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.
Nigeria’s Economy to Close 2021 at 2.5% Growth Rate
The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.
This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.
The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.
Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.
She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.
Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.
Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.
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