Economy

Base Effects Dictate Inflation Trajectory

Published

9 years ago

20/04/2017

By ARM Securities

Nigeria’s headline inflation decelerated for the second consecutive month (-50bps) to 17.3% in March – though lagging the scale of moderation in prior month’s reading (-92bps).

Instructively, the reading was significantly behind Bloomberg consensus estimate of 16.7% as changes in food inflation (-10bps to 18.4% YoY) failed to keep pace with expected impact of naira gains at the parallel market in the review month.

That said, high base effect from 2016 electricity and PMS price hikes saw core inflation decelerate a further 60bps to 15.4% to dictate overall YoY headline trajectory. On a MoM basis, headline inflation increased by 1.72% (vs. 1.49% in prior month’s reading) largely reflecting unyielding food pressures (MoM: 2.21%).

Focusing on core inflationary movements, breakdowns indicate a 1.32% MoM increase in the core basket buoyed by increases in prices of miscellaneous services related to dwelling, solid fuels, clothing materials, spirits, lubricants, and personal transport.

Also, despite moderation in prices of some known energy components (PMS (-0.3% MoM), Kerosene (-14.2% MoM) and Diesel (-5.4% MoM)), pressures from other sources (e.g. solid energy) drove energy inflation higher to 1.4% MoM.

The foregoing combined with the pressures on miscellaneous services front drove core inflation higher in the review month.

Overall, despite core inflationary pressures suggested by the MoM readings, the impact of high base remained evident on YoY numbers as increases in PMS (+10% YoY), kerosene (+54% YoY), and diesel (+60% YoY) in March failed to stall YoY core deceleration.

In line with the trend recorded over the prior months, MoM food inflation increased sharply by 2.2% (vs. February reading of 1.99%) despite naira gains at the parallel market in March.

According to FEWSNET, pressures on Nigeria’s farm produce prices persisted despite recent gains in foreign reserve (+0.4% to $30.4 billion) and direct government intervention due to structural challenges, restriction on use of forex reserve for food imports as well as higher transactions and transportation cost (March transport inflation: +1.2% MoM, +15% YoY) in the review period.

Specifically, while government’s interventions—including Anchor Borrowers programme—slightly increased areas cultivated, initiatives to curb transport challenges (i.e. grain by rail) were yet to kick-in to stem the major transport setback in the review month.

Importantly, MoM transportation inflation have steadily increased in the last three months, with the March reading (1.2% MoM) printing at the highest level since July 2016, following price hikes by major transport associations across the country in response to the sharp jump in Diesel prices in December.

For context, we note that the cost of transportation between assembly markets in North Central and other Northwest states of Nigeria, particularly to Dawanau market in Kano, increased by about 70% compared to last year.

Going forward, we expect impact of high base effect to continue to dictate core inflation and overall headline trajectory despite concerns on the food inflation front. Precisely, high base effect from the 45% and 68% increases in electricity and PMS prices in 2016 should leave YoY core reading subdued with recent gains in PMS, kerosene, and diesel prices leaving sizable scope for sustained decelerations.

However, we are less sanguine on the food side of things over the near term owing to recent pressures from higher transactions and transportation costs.

That said, the more recent retrace in diesel prices suggests that pressures from the transport front would be less impacting in coming reading. In addition to this, the incentive of higher prices and FG’s continued push on the Anchor Borrowers Program front are notable signposts of gradual near and medium term gains relating to domestic food availability respectively.

On the former, we expect farmers to sustain their ramp up of output in April offseason harvest as higher prices continue to provide the needed incentive.

Thus, with lagged impact of naira gains at the parallel market also raising scope for temperance in demand pressures from neighbouring West Africa, pressures on food inflation should be relatively contained in the coming reading compared to that of the prior month.

On balance, we expect moderation in core inflation to offset pressures from food inflation.

Against this backdrop, we now look for headline reading of 16.7% YoY for April with 2017 mean now printing at 15.4% YoY (2016: 15.6% YoY).

In terms of market impact, elevated MoM inflation reading provide another justification for CBN to leave its hawkish monetary policy intact over the near term.

That said, given the impact of contractionary monetary policy on FG’s borrowing cost with April 2017 subscription (N111 billion) significantly below amount on offer (N135 billion), we think pressures from the fiscal authorities could compel some form of monetary easing over H2 17.

Source: www.armsecurities.com.ng.

Economy

APM Terminals to Invest $600m in Nigeria’s Maritime Sector

Published

17 hours ago

15/05/2026

Modupe Gbadeyanka

By Modupe Gbadeyanka

The Nigerian maritime sector may soon witness the inflow of $600 million in investment from APM Terminals.

On the sidelines of the ongoing Africa CEO Forum in Kigali, Rwanda, the Regional President of APM Terminals for Africa-Europe, Mr Igor van den Essen, informed President Bola Tinubu that his company was interested in deepening its investment in Nigeria.

According to a statement issued by the Special Adviser to the President of Information and Strategy, Mr Bayo Onanuga, the investment would be deployed in Apapa port modernisation, logistics infrastructure, and long-term private-sector investment in Nigeria’s maritime sector.

President Tinubu welcomed the investments, emphasising that Nigeria is repositioning itself for greater competitiveness through ongoing economic reforms and infrastructure modernisation.

He said the country is determined to move beyond structural bottlenecks and outdated systems, stressing the need for advanced technology, faster cargo processing, and improved operational efficiency across the nation’s ports.

He emphasised that Nigeria possesses the market scale, talent base, and economic potential to support globally competitive maritime and logistics infrastructure investments and called on other investors to take advantage of Nigeria’s reform outcomes.

Earlier, Mr Igor van den Essen lauded President Tinubu’s reform agenda and policy direction, which had strengthened investor confidence and created renewed momentum for long-term infrastructure investments.

He described Nigeria as a strategic stronghold within its African operations, referencing over 20 years of collaboration and substantial existing investments in the country’s port ecosystem.

He reaffirmed his company’s commitment to expanding investments in Nigeria and disclosed plans to support the development of world-class terminal infrastructure and technology-driven port operations.

He also commended Mr Tinubu for establishing the National Single Window (NSW), which has streamlined trade procedures, improved Customs coordination, and reduced delays in cargo clearance.

Economy

Dangote Sues FG Over Fuel Import Licences

Published

17 hours ago

15/05/2026

Adedapo Adesanya

By Adedapo Adesanya

Dangote Petroleum Refinery has filed a new lawsuit against the federal government over the fuel import licences issued to ‌marketers and the Nigerian National Petroleum Company (NNPC) Limited.

Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued licences to six marketers for the importation of 720,000 metric tonnes of Premium Motor Spirit, known as petrol.

The marketers are NIPCO, AA Rano, Matrix, Shafa, Pinnacle, and Bono. The development comes amid claims by the NMDPRA that the Dangote Petroleum Refinery now supplies over 90 per cent of Nigeria’s daily petrol consumption.

Dangote said in the filing that the licences issued undermine its operations and contravene the law, which it argues allows imports only when domestic supply falls short.

Named in the suit against the country is the Attorney General and Minister of Justice, Mr Lateef Fagbemi. The federal government can only be sued via his office.

The case signals renewed tensions almost a year after Dangote withdrew an earlier lawsuit challenging similar licences. That case sought to nullify import permits issued to the NNPC and several traders.

The new filing asks the Federal High Court in Lagos to set aside import permits issued or renewed by the NMDPRA, arguing they breach an earlier order to maintain the status quo.

Dangote ⁠ended the earlier lawsuit in July 2025 without explanation, leaving unresolved questions over competition and supply in one of Africa’s largest fuel markets.

Nigeria ⁠has long relied on petrol imports due to underperforming state refineries. However, Dangote’s 650,000 barrels ⁠per day capacity refinery was touted to end that dependence.

Despite the presence of the facility, imports have continued to cover supply gaps as the refinery ramps up output.

The NMDPRA did not issue a single import licence in the first quarter of 2026 because the Dangote refinery had the capacity to meet Nigeria’s petrol demand.

Business Post gathered that only upon intervention by President Bola Tinubu were the licenses granted for the second quarter by the NMDPRA.

Economy

Nigeria’s Inflation Rises to 15.69% in April as Middle East Crisis Persists

Published

17 hours ago

15/05/2026

Adedapo Adesanya

By Adedapo Adesanya

The Nigeria Bureau of Statistics (NBS) has revealed that Nigeria’s headline inflation rate in April 2026 rose to 15.69 per cent, beating analysts’ expectations of 15.95 per cent, as the fallout from the Iran war continued to affect the global economy.

The statistical office on Friday showed the headline inflation rate for April on a month-on-month basis was 2.13 per cent, while the food inflation rate in the review month was 16.06 per cent on a year-on-year basis.

The rise in prices comes as an energy price shock stemming from the continued conflict in the Middle East, which stoked food prices and affected relative exchange rate stability.

According to the NBS, “this can be attributed to the rate of change in the average prices of the following products: Millet whole grain, yam flour, ginger (Fresh), beef, garri, tam tuber, pepper (Fresh), cray fish, cassava tuber, Beans, Irish Potatoes, tomatoes (fresh), wheat grain (Sold loose), soya beans, guinea corn, plantain, carrots (Fresh) etc.”

“The average annual rate of food inflation for the twelve months ending April 2026, relative to the previous twelve-month average, was 17.55%, which was 17.05% points lower than the average annual rate of change recorded in April 2025 (34.60%),” the NBS said.

Analysts at Coronation Research had earlier projected that the inflation rate in Nigeria would be at 15.95 per cent on a year-on-year basis in April 2026. It added that the expected inflation rate signals a return toward the underlying disinflation trajectory and could be a pivotal data point in shaping Monetary Policy Committee (MPC) deliberations at the next policy meeting.

It also expects food inflation to further ease, as food and non-alcoholic beverages remain the dominant contributor to headline CPI, accounting for about 40 per cent of the Consumer Price Index (CPI) basket.

The MPC of the Central Bank of Nigeria (CBN) will meet this month, the first since the Iran War started in late February, to review core monetary policies and possibly make adjustments.

The committee reduced the Monetary Policy Rate (MPR) by 50 basis points from 27.0 per cent to 26.5 per cent at its 304th Monetary Policy Committee (MPC) meeting in February.