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Tag: inflation

  • CBN Slashes Interest Rate By 350bps To 23%

    CBN Slashes Interest Rate By 350bps To 23%

    Precious Nwonu, Enugu

    The Central Bank of Nigeria has reduced its benchmark interest rate by 350 basis points, cutting the Monetary Policy Rate from 26.5 per cent to 23 per cent.

    CBN Governor Olayemi Cardoso announced the decision on Tuesday after the Monetary Policy Committee concluded its two-day meeting in Abuja.

    The reduction is the largest single cut in the current monetary policy cycle and came amid easing inflation, stronger external reserves and improved conditions in the foreign exchange market. Reuters reported that economists surveyed ahead of the meeting had expected the CBN to leave the rate unchanged at 26.5 per cent.

    The decision has raised expectations that borrowing costs could gradually decline for businesses and other private-sector operators, although the extent and speed of any reduction in lending rates will depend on how commercial banks transmit the policy change to customers.

    Cardoso, however, said the decision should not be interpreted as a broad shift towards monetary easing. He described it as a “reset and recalibration” aimed principally at improving the way monetary policy decisions are transmitted through the financial system.

    The MPC also adjusted the Standing Facilities Corridor around the MPR while retaining the Cash Reserve Requirement at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks and 75 per cent for non-Treasury Single Account public-sector deposits.

    According to Cardoso, the adjustment was designed to strengthen the effectiveness of monetary policy and restore the MPR as the central signal for interest rates in the economy.

    The governor said the committee had observed a disconnect between the MPR and prevailing money-market rates, which had weakened the transmission of previous policy decisions.

    He said the CBN’s ongoing changes to its monetary policy framework, including the use of the Nigerian Overnight Financing Rate as a transaction-based benchmark, were intended to improve transparency and strengthen the link between policy decisions and market rates.

    ### Inflation And External Position Support Rate Cut

    The latest decision followed a period of moderation in inflation and improvements in Nigeria’s external position.

    Nigeria’s headline inflation eased to 15.39 per cent in August 2026 from 15.43 per cent in July, according to the latest figures reported following the release of the Consumer Price Index.

    The MPC also noted an improvement in the country’s balance of payments position, with the surplus rising to $3.51 billion in the second quarter of 2026 from $2.38 billion in the first quarter.

    The current account surplus also increased to $7.54 billion in the second quarter from $4.49 billion in the preceding quarter.

    The committee said three consecutive months of declining headline inflation, relative exchange-rate stability and stronger external buffers had created room for the policy framework to be recalibrated.

    It also pointed to improved investor confidence and strengthening external-sector fundamentals as factors supporting the decision.

    ### Cardoso Says Tightening Cycle Has Worked

    Cardoso said the series of monetary tightening measures introduced by the CBN had achieved their primary objectives of helping to moderate inflation and stabilise the macroeconomic environment.

    “The tightening that we have done, in our view, has done its job. It has worked,” the governor said.

    He stressed that the latest decision should not be viewed as the beginning of an unrestricted easing cycle.

    “We should not see this as an easing. This is a reset and a recalibration,” he said.

    The governor said the CBN would continue to monitor economic developments and maintain a restrictive policy approach where necessary to protect the gains made in reducing inflation.

    ### Private Sector Welcomes Decision

    Business groups and economic analysts have welcomed the reduction, although some said the size of the cut came as a surprise.

    The Lagos Chamber of Commerce and Industry, Financial Derivatives Company, the Centre for the Promotion of Private Enterprise, the Nigeria Employers’ Consultative Association and other private-sector stakeholders said the lower policy rate could improve access to credit and support productive activities.

    The stakeholders said cheaper financing could benefit manufacturers and other businesses by reducing the cost of capital, potentially supporting investment and employment.

    The CBN’s decision has also renewed discussions about how quickly banks and other financial institutions will adjust their lending rates following the reduction in the policy rate.

    ### CBN Highlights Three Years Of Reforms

    Cardoso also used the briefing to highlight reforms implemented since he assumed office in 2023, including changes to the foreign exchange market, monetary policy operations and the banking sector.

    He said the CBN inherited an economy facing significant currency instability, multiple foreign exchange rates, high liquidity and weakened investor confidence.

    According to the governor, the reforms were aimed at returning the central bank to its core mandate of maintaining price and financial stability.

    He defended the unification of the foreign exchange market, saying the previous multiple-rate system created distortions and imposed significant costs on the economy.

    Cardoso also pointed to the recapitalisation of the banking sector, saying the exercise had attracted additional capital and positioned banks to support economic expansion.

    The governor said Nigeria’s gross external reserves had risen above $55 billion, describing the level as the highest in more than 18 years.

    ### Remittances Boost External Reserves

    Cardoso attributed part of the improvement in Nigeria’s external position to stronger diaspora remittances.

    He said monthly remittance inflows had increased from about $200 million when the CBN began efforts to encourage greater formal remittance flows to nearly $1 billion by July.

    The governor said the central bank would continue engaging Nigerians living abroad and other stakeholders to sustain the increase in remittance inflows.

    He also linked Nigeria’s return to major global investment indices, including developments involving FTSE Russell and JPMorgan, to improved international investor confidence.

    ### Fiscal And Monetary Authorities Strengthen Coordination

    The CBN governor also highlighted the recent fiscal-monetary coordination agreement between the Central Bank and the Federal Ministry of Finance.

    He said the Memorandum of Understanding was designed to institutionalise cooperation between fiscal and monetary authorities rather than leave coordination to individual relationships.

    Cardoso said closer cooperation would be particularly important as Nigeria moves towards an inflation-targeting framework, noting that controlling inflation would require coordinated action beyond monetary policy alone.

    ### CBN Prepares For Election-Year Liquidity

    With Nigeria approaching another political and electoral cycle, Cardoso said the CBN was preparing for possible changes in currency demand and liquidity conditions.

    He said the bank would monitor currency in circulation, banking-sector liquidity, monetary aggregates and foreign exchange demand while deploying appropriate liquidity-management tools when necessary.

    The governor assured Nigerians that the CBN would ensure adequate availability of currency while enforcing existing limits and working with law-enforcement agencies to tackle currency abuse.

  • Economy: Nigeria’s inflation rate hits 21.34%

    Economy: Nigeria’s inflation rate hits 21.34%

    The Consumer Price Index (CPI) which measures the rate of change in prices of goods and commodities increased by 5.72 per cent to 21.34 per cent year on year in December compared to 15.63 per cent in December 2021, the National Bureau of Statistics (NBS) stated yesterday.

    Month-on-month inflation also rose to 1.71 per cent in the review period compared to 1.39 per cent in November.

    According to the CPI figures for December, month-on-month inflation may have been caused by a sharp increase in demand usually experienced during the festive season, as well as an increase in the cost of production including increase in energy, transportation costs, and exchange rate depreciation among others.

    Food inflation rose to 23.75 per cent year-on-year which was 6.38 per cent higher compared to 17.37 per cent recorded in December 2021.

    On a month-on-month, the food inflation stood at 1.89 per cent, which was 0.49 per cent higher than the 1.40 per cent in November.

    The rise in food inflation was attributed to increases in prices of bread and cereals, oil and fat, potatoes, yam, and other tubers, fish, and food products.

    The core index, which excludes the prices of volatile agricultural produce stood at 18.49 per cent year on year in December, up by 4.62 per cent when compared to the 13.87 per cent recorded in 2021.

    Month-on-month, core inflation stood at 1.33 per cent in December compared to 1.67 per cent in the preceding month.

    Core inflation resulted from increases in prices of gas, liquid fuel, passenger transport by air, vehicle spare parts, fuels and lubricants for personal transport equipment, and solid fuel among others.

    On year-on-year, urban inflation increased to 22.01 per cent, compared to 16.17 per cent in 2021 while the index rose to 1.80 per cent month on month in December from 1.50 per cent in November.

    Rural inflation stood at 20.72 per cent year-on-year, higher than 15.11 per cent in December 2021 while month-on-month, the index rose to 1.63 per cent from 1.30 per cent.

    At the states level, all items inflation on yearly basis was highest in Bauchi (23.79 per cent), Kogi (23.35 per cent), Anambra (23.13 per cent), while Taraba (18.98 per cent), Osun (19.09 per cent) and Kwara (19.18 per cent) recorded the slowest rise in the headline index.

    Month-on-month basis, however, inflation was highest in Oyo (3.48 per cent), Abuja (3.05 per cent), Sokoto (2.58per cent), while Ebonyi (0.11 per cent), Ekiti (0.68 per cent) and Nasarawa (0.70 per cent) recorded the slowest rise.

    Also, year-on-year, food inflation was highest in Kwara (27.90 per cent), Imo (26.94 per cent) and Ebonyi (26.28 per cent), while Sokoto (20.90 per cent), Taraba (21.59 per cent) and Cross River (21.71 per cent) recorded the slowest rise in the index.

    On a month-on-month basis, however, food inflation was highest in Sokoto (3.38 per cent), Oyo (3.10 per cent) and Kaduna (2.97 per cent), while Nasarawa (0.06 per cent), Osun (0.70 per cent) and Kogi (0.76 per cent) recorded the slowest rise.

    (This Day)

  • Cooking Gas Inflation: Investors urge FG to tackle Foreign Exchange instability and high prices

     

     

    The President, Nigeria LPG Association, Mr. Nuhu Yakubu, said the association had been engaging with relevant agencies, with a view to addressing the issues.

     

    Speaking at the just-concluded 11th International Conference and Exhibition in Lagos, he said: “As an association, we are currently engaging with respective government agencies in addressing issues around LPG supply, particularly access to foreign exchange, value-added tax, levies, etc. We believe our efforts will yield positive results in good time.

     

    “Also, it is not far-fetched to state, therefore, that sustaining the growing adoption of LPG through sector-friendly policies and programmes will advertently support economic growth that will yield jobs and wealth creation. It is our collective responsibility to make this happen and an event such as this is one aimed at setting the pace.

     

    “In line with the 7th Sustainable Development Goals, SDGs, deepening education on the role of diverse applicable uses of LPG is critical as the world aims to provide cleaner, reliable, sustainable and affordable energy sources for everyone by 2030.

    ”Worthy of mention is the declaration of the Decade of Gas, by the Minister of State for Petroleum Resources, Chief Timipre Sylva with the support of the President and Commander in Chief, Retired Gen. Muhammadu Buhari, GCON, who ably doubles as Honorable Minister of Petroleum Resources.

     

    “The LPG sector is projected as an industry with this executive posturing to galvanize the entire LPG value chain to drive an upsurge adoption of LPG in spurring growth and improving the wellbeing of households across Nigeria.”

     

    Also, in the communiqué obtained by Vanguard at the end of the event, the experts noted that the nation had very huge gas reserves of over 200 trillion standard cubic feet, but noted that the current business environment had not been friendly.

     

    Specifically, the communique stated: “That the Petroleum Industry Act, PIA, should be implemented in a manner that will encourage massive domestic and foreign investments, required to stimulate sustainable growth while creating many multiplier effects, including jobs for Nigerians.

     

    “That such new investments are required to reduce Nigeria’s current dependence on imported LPG as well as meet rising future demand based on increased population. That the government should be consistent in the conceptualization and implementation of policies needed to ensure stability in the LPG sector.

     

    READ ALSO: Outrageous cost of cooking gas

     

    “That relevant stakeholders need to be involved and carried along in the process of taking new decisions to ensure successful implementation. That the imposition of the Value Added Tax, VAT, has negatively affected the sector in many unintended ways and should be eliminated.

     

    “That the high prices of LPG have shifted the demand to firewood and charcoal, thus fuelling desertification and erosion with a very negative impact on the environment. That a package of new incentives should be introduced to stimulate investment, processing and utilization of LPG in Nigeria in line with the nation’s Decade of Gas agenda.

     

    “That the LPG sector gasps for massive infrastructural development to stimulate and sustain expansion in the coming years. That the government and its agencies should intentionally eliminate all hindrances, especially lack foreign exchange, currently staring the sector in the face.”

     

    However, the Federal Government, yesterday, moved to check the rising price of cooking gas by setting up a new Domestic Base Price for gas as the, “Export Parity Price at the delivery point where there is a dominant supply of gas in Nigeria.”

     

    The Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Engr Farouk Ahmed, in a statement in Abuja, set out a new Domestic Base Price, DBP, framework and applicable gas wholesale price for the strategic domestic sector.

     

    Engr. Ahmed explained that the applicable Wholesale Gas Price for the power sector shall be the established Domestic Gas Price.

     

    According to him, the DBP will be determined annually based on the criteria set in the Third Schedule of the Petroleum Industry Act, which are a reference DBP to prices of gas in countries with significant reserves and production of natural gas, ensuring that Base Price considers the lowest cost of gas supply based on a Three-tier Cost of Supply Framework and DBP is related market-prices tied to International Benchmarks (for strategic investors)

     

    The Authority explained that, “Export Parity Price in this context is defined as a market-driven pricing framework, responsive to fiscal changes and weighed to ensure pricing flexibility while moderating swings to protect fragile domestic industries”.

     

    Investigation by Vanguard, weekend showed that the price of the product has continues to hover at N8,500 per 12.5 kg as consumers take to increased firewood consumption in different parts of the nation.

     

     

     

    Source: www.vanguardngr.com

     

  • Inflation: 7 million Nigerians pushed into poverty

    The World Bank says Nigeria’s inflation rate is expected to rise to the fifth highest in Sub-Saharan Africa by the end of 2021, behind only Zimbabwe, Zambia, South Sudan and Angola.

     

     

     

    This was disclosed at the presentation of Nigeria’s Development Report for the first six months of 2021 by the World Bank in Abuja.

     

     

    The bank said over 11 million more Nigerians are also expected to lose their jobs.

     

     

     

    According to the bank, inflation is also pushing seven million more Nigerians into poverty due to falling purchasing power.

     

     

    Among factors the bank says are responsible for the challenges are insecurity and conflict as well as the COVID-19 pandemic.

     

    The World Bank also said the economic growth in Nigeria is projected to remain below the population growth in the peri od under review.

     

     

     

    Source: www.theadvocatengr.com

  • Inflation is crippling the Nation’s economy

    Inflation is deepening poverty and crippling the economy, experts said yesterday as the National Bureau of Statistics (NBS) released its May figure.

     

    Although hardline inflation gained a marginal 0.19 per cent from the April rate, leaving it at 17.93 per cent, the World Bank said additional seven million people have been pushed below the poverty line.

     

    Director-General of the Lagos Chamber of Commerce and Industry (LCCI) Dr Muda Yusuf said: “From month on month perspective, inflation accelerated across all parameters and this underscores the fact that inflation remains a major challenge to investors and citizens.

     

    “Inflation is perhaps the biggest poverty accelerator because of the weakening of purchasing power.

     

    “It weakens real income, erodes purchasing power, puts pressure on operating costs, aggravates production costs, reduces sales and negatively impacts profit margins across sectors.

     

    “Tackling inflation would require fixing these supply-side challenges reining in on fiscal deficit monetisation.”

     

    Yusuf added that the Centra Bank of Nigeria’s financing of deficit, which had grown rapidly in recent years, was highly inflationary because of the profound effect on money supply growth.

     

    He said that the drivers of inflation had remained largely the same and were mainly supply-side issues.

     

    Yusuf noted that these included the security situation, cost of transportation and logistics, energy costs, exchange rate depreciation, illiquidity in the forex market, climate change, among other variables.

     

    “Monetisation of fiscal deficit has lately become an added factor, he added.

     

    The NBS said the composite food index rose by 22.28 per cent in May compared to 22.72 per cent in April, indicating a 0.44 per cent decrease.

     

    The Bureau, however, said there were increases in the prices of bread, cereals, milk, cheese, eggs, fish, soft drinks, coffee, tea and cocoa, fruits, meat, oils/fats and vegetables.

     

    The NBS Consumer Price Index (CPI) report of May said: “On a month-on-month basis, the headline index increased by 1.01 per cent.

     

    Read Also: Inflation pushes 7m Nigerians below poverty line, says World Bank

    “This is 0.04 percentage points higher than the rate recorded in April 2021 (0.97 per cent).

     

    “The consumer price index (CPI), which measures inflation, increased by 17.93 per cent (year-on-year)per cent 2021. This is 0.19 percent points lower than the rate recorded in April 2021 (18.12 per cent).”

     

    It said increases were recorded in all Classification of Individual

     

    Consumption by Purpose (COICOP) divisions that yielded the Headline index.

     

    The urban inflation rate, according to the Bureau, increased by 18.51 per cent (year-on-year) in May from 18.68 per cent recorded in April 2021, while the rural inflation rate increased by 17.36 per cent in May 2021 from 17.57 per cent in April.

     

    On a month-on-month basis, the NBS noted that the urban index rose by 1.04 per cent in May, up by 0.05 per cent points compared to the rate recorded in April 2021 (0.99), while the rural index rose by 0.98 per cent in May, up by 0.03 points compared to the rate that was recorded in April 2021 (0.95 per cent).

     

    It explained that the percentage change in the average composite CPI for the 12 months ending May over the average of the CPI for the previous 12 months period was 15.50 per cent, showing a 0.46 per cent point rise from 15.04 per cent recorded in April 2021.

     

    The NBS said on a month-on-month basis, the food sub-index increased by 1.05 per cent in May, up by 0.06 per cent points from 0.99 per cent recorded in April.

     

    This rise in the food index was caused by increases in prices of bread, cereals, milk, cheese, eggs, fish, soft drinks, coffee, tea and cocoa, fruits, meat, oils and fats and vegetables.

     

    The ‘All items less farm produce’ or Core inflation, which excludes the prices of volatile agricultural produce, stood at 13.15 per cent in May 2021, up by 0.41per cent when compared with12.74 per cent recorded in April.

     

     

     

     

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    The latest World Bank Nigeria Development Update (NDU) noted that “in 2020, the Nigerian economy experienced a shallower contraction of -1.8 per cent than had been projected at the beginning of the pandemic (-3.2%).

     

    “Although the economy started to grow again, prices are increasing rapidly, severely impacting Nigerian households,” NDU stated.

     

    The World Bank said the situation has “pushed an estimated seven million Nigerians below the poverty line in 2020 alone”.

     

    It said food prices accounted for over 60 per cent of the total increase in inflation.

     

    This edition of the NDU proposes near-term policy option organised around three priority objectives: reduce inflation by implementing policies that support macroeconomic stability, inclusive growth, and job creation; protect poor households from the impacts of inflation; and facilitate access to financing for small and medium enterprises in key sectors to mitigate the effects of inflation and accelerate the recovery.

     

    “Given the urgency to reduce inflation amidst the pandemic, a policy consensus and expedite reform implementation on exchange-rate management, monetary policy, trade policy, fiscal policy, and social protection would help save lives, protect livelihoods, and ensure a faster and sustained recovery,” said Marco Hernandez, the World Bank Lead Economist for Nigeria and co-author of the report.

     

    He said the government needed to maintain reform momentum, but that some important reforms had stalled.

     

     

     

    He cited petrol subsidies, which have recently returned after the government had established a market-based pricing mechanism, and electricity tariff reform, an area where planned adjustments to bring prices in line with costs have been paused.

     

    Hernandez said Nigeria had the largest number of people without access to electricity in the world, and that electricity subsidy benefited mainly richer households.

     

    According to him, only 22 per cent of the poorest households have access to electricity, while 82 per cent of the richest can access power.

     

    He said the COVID-induced crisis was expected to push over 11 million Nigerians into poverty by 2022, taking the total number of people classified as poor to over 100 million.

     

    The World Bank expects the Nigerian inflation rate in 2021 to be 16.5 per cent. The forecast for sub-Saharan Africa, excluding Nigeria, is 5.9 per cent.

     

    “Nigeria faces interlinked challenges in relation to inflation, limited job opportunities, and insecurity”, said Shubham Chaudhuri, the World Bank Country Director for Nigeria.

     

    “While the government has made efforts to reduce the effect of these by advancing long-delayed policy reforms, it is clear that these reforms will have  to be sustained and deepened for Nigeria to realize its development potential.”

     

     

     

    Source: www.thenationonlineng.net

  • Rising Inflation, an Economic Drawback

    (more…)

  • Insecurity and Food inflation in Nigeria, Finding solutions to poor management

    Insecurity and Food inflation in Nigeria, Finding solutions to poor management

    THE coronavirus pandemic has contributed a lot to the current food inflation ravaging Nigerian families. Coming in February/March, the beginning of the planting season, and forcing a prolonged national lockdown, it prevented many of our farmers from sowing their seeds.

     

    Food inflation, according to the National Bureau of Statistics, NBS, rose from 16.66 per cent to 17.38 per cent in September this year and getting worse as the year draws to a close.

     

    General inflation in the economy stands at 14.33 per cent. The prices of staple food items such as yam, garri, pepper, onions, rice, tomatoes and others have gone sky high at a time when the incomes of average families have dwindled or run out altogether due to layoffs and pay cuts.

     

    It promises to be a very bleak Yuletide festive period.

     

    The situation we face could have been much more manageable if the President Muhammadu Buhari administration had made good its campaign promise of solving our security problem which is part of the regime’s three-point agenda: economy, security and anti-corruption.

     

    Indeed, the security situation has worsened under the watch of this regime due mainly to poor management and the kid gloves with which it has treated aspects of our insecurity.

     

    Though the Federal Government often beat its chest that it has dislodged Boko Haram jihadists from their captured territories, the terrorists have multiplied beyond Boko Haram, with the Islamic State in West Africa Province, ISWAP, now equally formidable.

     

    The foreign bandits that some evil politicians had brought to fight their turf wars have now turned their guns on residents of states in the North West and North Central, particularly Zamfara, Katsina, Kaduna Niger and parts of Kogi.

     

    Also, armed Fulani militias from all parts of Africa masquerading as herdsmen have flooded the forests and farmlands of states in the Middle Belt and South, killing and kidnapping for ransom, robbing, destroying farmlands with their cattle and forcibly settling on people’s lands.

    Curiously, the herdsmen militias are the only terrorist groups that government has refused to tag the terrorists that they are. It has also refrained from deploying the army to flush them out of our bushes.

    All these agents of insecurity marauding all over Nigeria have succeeded in displacing farming communities and making farming unsafe.

    Farmers are afraid to engage in their legitimate occupation. With the closure of the borders and restrictions on food importation, it is not surprising that Nigeria is on the verge of famine.

    If the Federal Government is unwilling to get rid of the armed herdsmen, then it should allow each community to deal with them and allow farmers back to work. Without solving our insecurity problems there are simply no ot her ways out of this problem.

    Source: www.vanguardngr.com