Business and Economy

Nigeria’s inflation report for January 2023

The National Bureau of Statistics (NBS) reports that in January 2023, Nigeria’s inflation spiked to 21.82 percent. The Central Bank of Nigeria is redesigning the naira at the same time as this. The National Bureau of Statistics reports that the inflation rate in January increased by 0.48 percentage points from the 21.34 percent that was registered in December 2022. After the first decrease in inflation occurred in December 2022, this marks a new 17-year high. Nigeria’s inflation rate had been steadily increasing before December for a period of 11 months.

Headline rate 21.82% y/y (21.34% December);
Core rate 19.16% y/y (18.49%); and
Food rate 24.32% y/y (23.75%).  

  • The headline inflation rate for January jumped to 21.82% y/y, up 47bps from the previous month.
  • The headline inflation rate climbed from the previous month’s 1.71% to 1.87% on a monthly basis.
  • The ongoing fuel shortage can be partially blamed for the m/m increase in production and transportation expenses.
  • Inflation in the food sector (24.32%) increased by 56 basis points from the previous month. Prices for yam and other tubers, as well as bread, cereals, vegetables, oil, and fats, experienced the largest increases.
  • Inflation of imported food prices on a year-over-year basis climbed by 15 basis points to 18.50% y/y from 18.35% y/y in the previous month.
  • Core inflation went from 18.49% y/y in the previous month to 19.16% y/y, a rise of 66 basis points. Gas, liquid fuel, air travel for passengers, auto parts, gasoline and lubricants for personal transport equipment, and solid fuel were all affected by inflation.
  • The housing segment’s growth was 17.90% year over year and 1.55% month over month. Additionally, the transport sector saw growth of 21.02% y/y and 1.99% m/m. These rises in the transportation sector can be partially related to recent fuel shortages as well as price increases in deregulated goods like diesel, kerosene, and aviation fuel.
  • Based on the headline inflation reported by the NBS by state, Bauchi had the highest rate of growth (24.79% y/y) and Jigawa had the lowest rate of growth (19.09% y/y) in January ’23. It is important to note that household baskets differ amongst states as a result of diverse consumption habits.
  • The cost of conducting business is currently being driven up by structural problems like instability, inadequate logistics, and a lack of energy supply.
  • Other factors include, among others, rising commodity costs, pressure on currency rates, and ongoing gasoline shortages. The CBN/MPC increased the policy rate by +100bps to 17.5% in January ’23 in order to keep inflation under control.
  • The next MPC meeting is set for March 20 and 21 of 23. Another increase in the policy rate is not unlikely given the MPC’s determination to bring back price stability.
  • To read the full report, click here. SOURCE: – Coronation Merchant Bank

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