Economy
How Rising Food Prices Pushed Inflation to 49-Month High of 18.17%
By Adedapo Adesanya
On Thursday, the National Bureau of Statistics (NBS) announced that inflation in Nigeria surged to a 49-month high as it rose to 18.17 per cent from 17.33 per cent recorded in February 2021.
The last time Nigeria recorded an inflation rate higher than 18.17 per cent was in January 2017, when headline inflation stood at 18.72 per cent.
In the report released by the NBS yesterday, the inflation numbers for last month were 0.82 per cent higher than the February figures.
On a month-on-month basis, the headline index increased by 1.56 per cent in March 2021, this is 0.02 per cent points higher than the rate recorded in February 2021 (1.54 per cent).
From the NBS report, it was clear that the inflation worsened last month as a result of rising food prices in the country and this can be attributed to insecurities in the country.
Why food prices are high
Many farmers have been unable to go to their farms because of fears of being killed or if lucky, just abducted with a huge amount of money paid for their freedom.
For those who managed to be on their farms, they have to pay levies to bandits for planting and harvesting and when the farm products are to be transported to the market, another huddle is there waiting for them.
Several transporters have complained bitterly of how they pay to security officials who mount roadblocks and in some cases, there is the fear of being kidnapped by hoodlums on the road.
By the time the products get to market, all these costs are factored into them while the sellers will have to pass on the extra cost on the consumer, leaving the prices very high for most consumers to purchase because of the harsh economic situation in the country.
Food index figures
According to the stats office on Thursday, last month, the country’s food inflation jumped to 22.95 per cent from 21.79 per cent recorded in the previous month.
On a month-on-month basis, the food sub-index increased by 1.9 per cent in March 2021, up by 0.01 per cent points from 1.89 per cent recorded in February 2021.
The stats office explained in the report that the rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam, and other tubers, meat, vegetables, fish, oils and fats, and fruits.
Also, the average annual rate of change of the food sub-index for the 12-month period ending March 2021 over the previous 12-month average was 17.93 per cent representing 0.68 per cent points from the average annual rate of change recorded in February 2021 (17.25 per cent).
Meanwhile, the urban inflation rate rose to 18.76 per cent (year-on-year) in March 2021 from 17.92 per cent recorded in February 2021, while the rural inflation rate jumped to 17.6 per cent in March 2021 from 16.77 per cent in February 2021.
The ”All items less farm produce” or core inflation, which excludes the prices of volatile agricultural produce rose to 12.67 per cent in March 2021, up by 0.29 per cent when compared with 12.38 per cent recorded in the preceding month.
On a month-on-month basis, the core sub-index increased by 1.06 per cent in the period under review. This was down by 0.15 per cent when compared with 1.21 per cent recorded in February 2021.
The average 12-month annual rate of change of the index was 10.01 per cent for the 12-month period ending March 2021; this is 0.76 per cent points lower than the 10.77 per cent recorded in February 2021.
NBS revealed that the highest increases were recorded in prices of passenger transport by air, medical services, miscellaneous services relating to the dwelling, passenger transport by road, hospital services, passenger transport by road.
Others were pharmaceutical products, paramedical services, vehicle spare parts, dental services, motor cars, maintenance and repair of personal transport equipment, and hairdressing salons and personal grooming establishment.
Kogi State recorded the highest inflation rate by states in March 2021 with a rise of 24.51 per cent while Cross River (14.45 per cent) recorded the slowest rise in headline year-on-year inflation.
The Yahaya Bello governed state also recorded the highest in terms of food inflation, on a year on year basis at 29.71 per cent while Bauchi State (18.61 per cent) recorded the slowest rise .in year on year inflation.
Analysts have noted that Nigerians will now have to battle with a worsening purchasing power as prices of goods and services continue to rise, meaning more poverty and an increased economic downturn.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
By Adedapo Adesanya
The Naira appreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N14.79 or 0.9 per cent to trade at N1,534.50/$1 compared with the preceding day’s N1,549.29/$1 on Thursday, December 12.
The strengthening of the domestic currency during the trading session was influenced by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN).
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN; publication of real-time prices and buy-sell orders data from this system has lent support to the Naira at the official market.
Equally, the local currency improved its value against the British Pound Sterling by N3.91 to wrap the session at N1,954.77/£1 compared with the previous day’s N1,958.65/£1 and against the Euro, the Nigerian currency gained N2.25 to sell for N1,610.41/€1 versus N1,612.66/€1.
However, in the black market, the Naira crashed further against the US Dollar on Thursday by N10 to quote at N1,680/$1 compared with Wednesday’s closing rate of N1,670/$1.
Meanwhile, the cryptocurrency market majorly corrected after earlier gains as US President-elect Donald Trump reiterated his ambition to embrace crypto assets, but a bond market rout dragged risk assets lower.
Mr Trump said, “We’re going to do something great with crypto” while ringing the opening bell at the New York Stock Exchange, reiterating his ambition to embrace digital assets in the world’s largest economy and create a strategic bitcoin reserve.
Alongside, the European Central Bank trimmed its benchmark interest rates by 25 basis points and in its dovish policy statement hinted that more rate cuts were likely to happen.
The biggest loss was made by Cardano (ADA), which fell by 4.9 per cent to trade at $1.10, followed by Ripple (XRP), which slid by 4.1 per cent to $2.33 and Dogecoin (DOGE) recorded a value depreciation of 2.9 per cent to sell at $0.4064.
Further, Solana (SOL) slumped by 1.8 per cent to $225.89, Binance Coin (BNB) slipped by 1.3 per cent to $746.92, Bitcoin (BTC) declined by 0.6 per cent to $99,998.18, Ethereum (ETH) crumbled by 0.5 per cent to $3,909.43, and Litecoin (LTC) dipped by 0.3 per cent to $121.52, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market slumped on Thursday, pressured by an expected increase in supply, supported by rising expectations of a Federal Reserve interest rate cut.
The International Energy Agency (EIA) made a slight upward revision to its demand outlook for next year but still expected the oil market to be comfortably supplied, with Brent crude futures losing 11 cents or 0.15 per cent to trade at $73.41 per barrel and the US West Texas Intermediate (WTI) crude futures declining by 27 cents or 0.38 per cent to finish at $70.02 per barrel.
The IEA in its monthly oil market report increased its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 barrels per day last month, largely in Asian countries due to the impact of China’s recent stimulus measures.
At the same time, the IEA expects nations not in the Organisation of the Petroleum Exporting Countries and Allies (OPEC+) group to boost supply by about 1.5 million barrels per day next year, driven by the US, Canada, Guyana, Brazil and Argentina – more than the rate of demand growth.
On Wednesday, OPEC cut its demand growth forecast for 2024 for the fifth straight month.
The IEA said that, even excluding the return to higher output quotas, its current outlook is to a 950,000 barrels per day supply overhang next year, which is almost 1 per cent of the world’s supply.
The Paris-based agency said this would rise to 1.4 million barrels per day if OPEC+ goes ahead with its plan to start unwinding cuts from the end of next March.
Next year’s surplus could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices.
Meanwhile, inflation rose slightly in November increasing the possibility of a US Federal Reserve rates cut again as the data fed optimism about economic growth and energy demand.
Support also came as crude imports in China grew annually for the first time in seven months in November, up more than 14 per cent from a year earlier.
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