- Nigeria’s Inflation Rises to 12.13% in January
Nigeria’s inflation rate rose for the fifth consecutive month in January as border closure and lack policy clarity bites.
The Consumer Prices Index, which measures inflation rate, rose from 11.98 percent recorded in December to 12.13 percent year-on-year, according to the latest report from the National Bureau of Statistics (NBS).
This was 0.15 percent higher than the 11.98 percent filed in December.
On a monthly basis, headline inflation grew by 0.87 percent in the month under review, up by 0.02 percent when compared to 0.89 percent recorded in December 2019.
Accordingly, average annual Food Index rose by 13.86 percent in January from 13.74 percent in December 2019. While the composite food index expanded by 14.85 percent during the same month, higher than the 14.67 percent recorded in December 2019.
The bureau attributed the increase in cost of food to the surge in prices of bread and cereals, meat, oils and fats, potatoes, yam and other tubers and fish.
The Central Bank of Nigeria led monetary policy committee had said surged in prices due to border closure was reactionary but several months after the decision of president Muhammadu Buhari to close the nation’s land borders, consumer prices continue to rise and expected to surge even further if the CBN’s Open Market Operation policy is not reversed.
Policy uncertainty amid global slowdown continues to hurt the nation’s foreign direct investments in key sectors that could have helped plugged domestic production deficit due to border closure.
The International Monetary Fund (IMF) on Tuesday lowered Nigeria’s growth projection for the year from 2.5 percent to 2 percent, citing weak investment, low household incomes and slow economic recovery.
The fund points to weak declining foreign reserves amid falling oil prices as coronavirus hurts demand of the commodity.
“High fiscal deficits are complicating monetary policy,” the report said.
“Weak non-oil revenue mobilisation led to further deterioration of the fiscal deficit, which was mostly financed by Central Bank of Nigeria (CBN) overdrafts. The interest payments to revenue ratio remain high at about 60 per cent.”
Therefore, rising consumer prices –with increase in Value Added Tax (VAT) from 5 percent to 7.5 percent –could significantly slow down growth in 2020, especially with foreign reserves declining to from $45 billion in June 2019 to $37 billion this month.