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Nigeria’s Inflation Rate Inches Higher in September Amid Rising Economic Uncertainty and Social Unrest

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Consumer Prices

Nigeria’s Inflation Rate Jumps to 13.71 Percent in September

Inflation rate in Africa’s largest economy has continued to rise despite efforts by both the Central Bank of Nigeria and the Federal Government to contain the persistent increase in prices.

In the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS), the inflation rate increased by 13.71 percent year-on-year in the month of September.

This was 0.49 percent higher than the 13.22 percent recorded for the month of August.

On a monthly basis, the inflation rate rose by 1.48 percent in the month under review, up by 0.14 percent when compared to 1.34 percent achieved in August.

CPI, which measures the inflation rate in an economy at a certain period, has been rising in Nigeria since the beginning of the year and jumped above 13 percent after COVID-19 broke out in the country in February.

Disruption of the global supply chain by COVID-19 lockdown escalated prices in Nigeria, a nation that depends on imports for over 90 percent of its consumption. Inability to import goods amid limited local production bolstered prices during the COVID-19 lockdown.

However, plunged in oil prices amid dwindling foreign reserves weighed on the Central Bank of Nigeria’s ability to intervene at the nation’s foreign exchange market to support the Naira value and boost US dollar liquidity in Africa’s largest economy.

Also, the devaluation of the Nigerian Naira to accommodate the change in the nation’s economic fundamentals means local businesses or importers need more money to import the same goods. Therefore, persistent dollar scarcity, higher foreign exchange rates amid limited available import goods are responsible for the high cost of goods and services.

Again, the social unrest between the Nigerian government and the youths has continued to drag on the nation’s investment sentiment. Plunging the necessary foreign direct investment needed to cushion the economy, especially with the foreign reserves presently hovering between $35.75 billion.

The Food sub-index rose by 15.13 percent year-on-year in September, representing an increase of 0.26 percent from the 14.87 percent posted in August.

On a monthly basis, the food sub-index rose by 1.88 percent in September 2020, up by 0.21 percent points from 1.67 percent recorded in August 2020.

 

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

CBN Predicts 2 Percent Growth for Nigeria in 2021

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Despite the economic recession and numerous uncertainties encompassing Nigeria in recent months, the Central Bank of Nigeria (CBN) has said the nation will grow by 2 percent in 2021.

Speaking at the 2020 bankers’ dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN), Godwin Emefiele, the Governor, CBN, said implemented government intervention programmes will aid the nation’s recovery by next year.

Emefiele further stated that the intervention efforts represent around 3.5 percent of Nigeria’s current Gross Domestic Product (GDP).

He said, “Our actions in 2021 would be guided by the considerations that emerged from the Monetary Policy Committee meeting of November 23 & 24, 2020, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices.”

On fast declining foreign reserves, the Governor said the institution has adopted a demand management framework designed to boost the production of items that can be produced locally and aid conservation of external reserves.

Due to the unprecedented nature of the shock, we continued to favour a gradual liberalisation of the foreign exchange market in order to smoothen exchange rate volatility and mitigate the impact which rapid changes in the exchange rate could have on key macro-economic variables,” Emefiele stated.

The CBN projection came few weeks after the National Bureau of Statistics (NBS)’s report showed Africa’s largest economy contracted by 3.62 percent in the third quarter following a 6.10 percent decline posted in the second quarter. Nigeria officially slid into the worse economic recession in almost 30 years and the second economic recession under the current administration.

While, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has projected that Nigeria would rebound from the recession in this final quarter or the very first quarter of 2021, falling revenue generation, rising capital flight amid weak demand due to the negative impact of coronavirus on earnings, household incomes and lack of jobs remain a concern.

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Economy

COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday

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Oil prices rose further on Wednesday as hope for an effective COVID-19 vaccine and the news that the United States of America’s President-elect, Joe Biden has begun transition to the White House bolstered crude oil demand.

Brent crude oil, a Nigerian type of oil, gained 1.63 percent or 78 cents to $48.64 per barrel at 11:50 am Nigerian time on Wednesday.

The United States West Texas Intermediate (WTI) crude oil rose by 1.36 percent or 61 cents to $45.52 per barrel.

OPEC Basket surged the most in terms of gain, adding 3.16 percent or $1.37 to $44.75 per barrel.

This was after AstraZeneca, Moderna and Pfizer-BioNTech announced the positive results of their trials.

Moderna and Pfizer had claimed over 90 percent effective rate in trials while AstraZeneca said its COVID-19 vaccine was 70 percent effective in trials but could hit 90 percent going forward.

The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Also, the decision of President-elect Joe Biden to bring Janet Yellen, the former Chair of Federal Reserve, back as a Treasury Secretary of the United States is fueling demand and strong confidence across global financial markets.

President-elect Biden’s cabinet choices, particularly Janet Yellen’s Treasury Secretary position, are adding to upside momentum across a broad space of asset classes,” said Jim Ritterbusch of Ritterbusch and Associates.

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Economy

Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021

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The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.

The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.

Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.

According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.

The administration aimed to implement at least 70 percent of the proposed budget if approved.

He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”

He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”

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