Maintaining Rising Streak, Inflation Records 18-month High

CBN Governor, Mr. Godwin Emefiele

In line with the expectations of the Central Bank of Nigeria and economic experts, the inflation figure rose to 11.85 percent in November from 11.61 percent in October year-on-year. Bamidele Famoofo writes that food prices remained the biggest driver of headline inflation in the review period

The National Bureau of Statistics (NBS) has said headline inflation rose by 0.24 percent from 11.61 percent in October to 11.85 percent in November. The bureau recognized the composite food index as the biggest contributor to average prices increase in the review period.

‘’The composite food index rose by 14.48 percent in November 2019 compared to 14.09 percent in October 2019. This rise in the food index was caused by increases in prices of bread, cereals, oils and fats, meat, potatoes, yam and other tubers, and fish. On a month-on-month basis, the food sub-index increased by 1.25 percent in November 2019, down by 0.08 percent points from 1.33 percent recorded in October 2019,’’ NBS said.

NBS explained that the average annual rate of change of the food sub-index for the 12-month period ending November 2019 over the previous 12-month average was 13.65 percent, 0.11 percent points from the average annual rate of change recorded in October 2019 (13.54) percent.

Meanwhile, the development did not catch the monetary authority and financial experts unawares.

The Governor of the Central Bank of Nigeria, Godwin Emefiele, at the annual Bankers’ Night organised by the Chartered Institute of Bankers of Nigeria (CIBN), said there were plans to curb the rising inflationary trend.

Disclosing plans by the CBN to support the economic recovery and enable stronger growth for the country’s gross domestic product (GDP), Emefiele said the bank would continue its current tight stance, particularly in view of rising inflation expectations.

“Though we will act to appropriately adjust the policy rate in line with unfolding conditions and outlooks, the CBN will continue to ensure that the policy interest rate is delicately set to balance the objectives of price stability with output stabilization,” he explained.


Economic analysts at GTI Capital also said they expected the inflation rate to further surge in November, based on their Pre-CPI report analysis, but they were a bit far from hitting the target.

A report released by GTI ahead of the announcement made by the NBS said, “Our findings suggest that the headline inflation rate (a measure of the average change in the price level of both food and non-food items) will climb by a minimum of 7bps to 11.68 percent y/y from 11.61 percent in the preceding month. This modest upsurge, we believe, will mainly be driven by a joint increase in both the core inflation (i.e. non-food items price index) and Food inflation (i.e. food price index).”

GTI Capital hinged its prediction on the projected effect of three notable drivers within the month – seasonality effect, FX inflows reduction, and conflict report in some agrarian communities.

It added, “First, we expect the characteristic increase in end-of-the-year consumer spending to drive up prices on foods, clothing items, transportation, and recreation services (to mention but few) in November. Secondly, we expect the negative impact of reduced FX inflows due to oil price and output volatility (at a time demand for FX by domestic importers is high), and CBN continuous draw-down on the foreign reserves balance (which has led to Nigeria external reserve slipping to $39 billion) to pressure core inflation (non- food items price index) to 8.92 percent y/y (or 0.72 percent m/m) from 8.88per cent y/y (or 0.74 percent m/m) in the preceding month.

“Thirdly, the recent reports of conflicts in some agrarian communities in the middle-belt and core North (which has affected the supply and prices of some farm produce at a time the land border remains shut by the federal government) are expected to negatively impact food price inflation. As such, we expect the food price sub-index to climb to 14.38 percent y/y (or 1.36 percent m/m) from 14.09per cent y/y (1.33 percent m/m) in the previous month.

This we anticipate being more pronounced on the prices of staple food items such as rice, yam, pepper, and vegetable.”

Cordros Securities Limited said it expected an inflation figure higher than what was published by the NBS in November. “In line with our expectations for continued food price pressure, November’s headline inflation printed 11.85per cent y/y – the highest since May 2018. The outturn is 25bps higher than the prior month (October: 11.61per cent y/y) and 4bps shy of our estimate (11.89per cent y/y).”

Cordros Securities said the dual impact of the sustained border closure and festive induced demand took a toll on food prices, as food inflation surged by 39bps to 14.48per cent y/y.

“The increase stemmed from farm-produce (+36bps), processed food (+101bps) and imported food (+4bps). However, the initial reaction from the border closure seems to be fading, as food prices, on a month-on-month basis, dipped marginally by 8bps,” it said.

Justifying its position, Cordros said: “In our inflation note from last month, we argued that the impact of a low base from the corresponding period in the prior year would pressure core inflation. True to our prognosis, core inflation expanded by 12bps to 8.99 percent y/y – highest in seven months – with pressure emanating primarily from energy inflation (+44bps). In our view, the pressured energy price was due to a sharp jump in AGO (diesel) prices (+2.52 percent y/y). Similarly, to the yearly movement, month-on-month core inflation increased marginally by 5bps, reflecting pressure from higher average PMS (+1.03 percent m/m) prices.”

Economic analysts at Cordros said the rising trend would persist this month as they expect festivity-induced demand, coupled with the impact of the border closure to have a negative pass-through on food inflation.

“That said,” they noted, “despite continued FX stability and liquidity, we expect core inflation to increase further, given the low base from the corresponding period in the prior year. Overall, we expect headline inflation to sustain its upward trajectory, expanding to 12.05 percent y/y (0.92 percent m/m) in December.”

The Bureau’s Statistics

Explaining the rationale behind inflation performance in November, the NBS said percentage change in the average composite CPI for the twelve months period ending November 2019 over the average of the CPI for the previous twelve months period was 11.35 percent, representing a 0.05 percent point from 11.30 percent recorded in October 2019.

According to the bureau, the urban inflation rate increased by 12.47 percent (year-on-year) in November 2019 from 12.20 percent recorded in October 2019, while the rural inflation rate increased by 11.30 percent in November 2019 from 11.07 percent in October 2019.

It explained: “On a month-on-month basis, the urban index rose by 1.07 percent in November 2019, down by 0.08 from 1.15 percent recorded in October 2019, while the rural index also rose by 0.98 percent in November 2019, down by 0.01 from the rate recorded in October 2019 (0.99) percent.

“The corresponding 12-month year-on-year average percentage change for the urban index is 11.75 percent in November 2019. This is higher than 11.68 percent reported in October 2019, while the corresponding rural inflation rate in November 2019 is 10.98 percent compared to 10.95 percent recorded in October 2019.”


Nigerians who reside in Sokoto, Kebbi, and Ekiti felt the impact of inflation more than those in the other states of the federation in the review period.

Food inflation on a year-on-year basis was highest in Sokoto (18.77 percent), Kebbi (18.08 percent) and Ekiti (17.18 percent). However, residents of Katsina, Bayelsa, and Bauchi felt the least impact of inflation with 12.61 percent, 12.50 percent, and 12.44 percent, respectively.

On a month-on-month basis, November 2019 food inflation was highest in Kwara (2.92 percent), Sokoto (2.72 percent) and Bayelsa and Edo (2.66 percent). While Nasarawa (0.31 percent) recorded the slowest rise with Lagos and Ondo recording price deflation or negative inflation (general decrease in the general price level of food or a negative food inflation rate).