CBN Governor, Mallam Sanusi Lamido Sanusi
Nigeria’s composite Consumer Price Index (CPI) which measures the rate of inflation dropped by 300 basis points to nine per cent year-on-year in January from 12 per cent in December 2012.
The National Bureau of Statistics (NBS), which revealed this Monday also projected a real gross domestic product (GDP) growth rate of 6.75 per cent for the Nigerian economy in 2013 and an average rate of 6.9 per cent over the period of 2013-2016.
The core inflation index also decreased to 11.3 per cent from 13.7 per cent in the previous month.
The drop in inflation is expected to excite the Central Bank of Nigeria (CBN), which has been battling to achieve single-digit inflation rate with the tight monetary policy in the past 18 months. But the apex bank may come under severe pressure to cut the Monetary Policy Rate (MPR) following the decline in CPI.
CBN Governor, Mallam Sanusi Lamido Sanusi, had said the bank was more concerned about the stability of the economy insisting that other than inflation, rates are influenced by other variables including power and security.
However, the NBS attributed the 25 per cent drop in CPI to base effects including lower food prices.
“These are as a result of higher price levels in the previous year, which imply that the year-on-year changes exhibited this year will be muted. In particular, the Nigerian economy exhibited several shocks in January 2012. The partial repeal of the premium motor spirit (Petrol) subsidy led to increases in transportation costs as well as secondary effects, as the transportation costs affected both food and non-food prices.
“There were also the civil protests which followed, and the man-made price gouging during the month, as merchants tried to take advantage of temporary shortages. The resulting base effects – the relative lower rise in year-on-year changes exhibited in January 2013- is particularly noticeable in the decline in the Core index, decreasing to 11.3 per cent in January (from 13.7 per cent in December),” it said.
The NBS, said further that the relative moderation in the headline index in January was helped by declines in seven out of the 12 United Nations Classification of Individual Consumption by Purpose (COICOP) divisions, as well as declines in major the Food and Core sub-indices.
It said the composite CPI increased by 0.62 per cent month-on-month from index levels recorded in December 2012, while Urban inflation rate eased to 9.2 per cent year-on-year in January, representing a decrease of 5.2 percentage points from the 14.5 per cent recorded in December.
Also, the Rural index decreased by 1.1 percentage points to 9.1 per cent on a year-on-year basis in January.
However, the “All items less Farm Produce” index which excludes the prices of volatile agricultural products decreased by 2.3 per cent to 11.3 per cent year-on-year compared to 13.7 per cent in December.
Meanwhile, the NBS, which had estimated a 6.61 per cent growth in Real GDP for 2012, said in its new Economic Outlook released yesterday that the prediction was based on the assumptions that the CBN would continue to promote moderate monetary policy. It also projected that inflation rate of about 9.8 per cent on the average throughout the year.
It said growth in 2013 would be aided largely by current structural reforms including reforms in agriculture among others.
The statistics bureau said: “This forecast appears to mirror a consistent growth pattern (when compared to previous statistics) for the Nigerian economy taking cognisance of evident realities in the macroeconomic environment in addition to the gradually improving productive base of the economy.
“Also, the continued efforts of the government towards revamping the economy through various sectoral policy reforms such as energy reforms, consolidation and post consolidation exercises going on in the banking and sub-banking sectors, agricultural reforms and oil sector reforms are expected to drive higher growth during the period.”
It added that if the resilience witnessed in 2012 should be sustained, the Nigerian economy was expected to expand moderately in 2013 given the intent by government to pursue macroeconomic stability during the year.
On the country's trade statistics, the NBS also disclosed that the value of total Merchandise Trade for the country as at the third quarter of 2012, stood at about N20, 885.4 billion over the first three quarters of the year.
“By the fourth quarter of 2013, growth in the value of total merchandise trade will be driven by both higher imports (relative to Fourth Quarter 2012) as well as oil and non-oil exports. In this view, there is less likely to be pressure on Nigeria foreign reserves as there will be decreasing demand for foreign exchange to settle high import bills, the statistical agency added.