Consumer Price Index, the measure for inflation rate, declined (Year-on-Year) for the fourteenth consecutive month in March 2018. Headline inflation dropped to 13.34 percent1 – representing a marginal 0.99 percentage-points decrease, and lowest inflation rate in two years. The sub-indices moved in tandem with headline inflation as food inflation fell from 17.59 percent to 16.08 percent, while core inflation moderated to 11.20 percent, down slightly from 11.70 percent. The year-on-year decline is attributable to base effects of higher prices in corresponding month of 2017. Additionally, stable exchange rate moderated the impact of imported consumer goods prices2. Going forward, to stimulate further decline in both food and core inflation rates, it is necessary to promote investment in the agriculture sector as well as to foster policies that promote forex reserve growth and exchange rate stability.
Macroeconomic Report & Economic Updates
International rating body, Fitch, has projected higher economic growth for Nigeria in 2018. The body estimated that Nigerias economy will grow by 2.6 percent, slightly higher compared to projections from the International Monetary Fund (2.1 percent) and The World Bank (1 percent). A myriad of factors may have driven the projected increase: improved availability of forex for the non-oil sector, higher government capital expenditure capability driven by more oil revenue, and fiscal stimulus. However, the relatively strong economic growth projected by Fitch and IMF may be hampered
Provisional Monetary statistics by the CBN show an increase in currency in circulation a portion of overall money supply. Specifically, currency in circulation rose (Month-on-Month) by 14.2 percent to N2.2 million in December 2016 the highest Month-on-Month increase recorded for the year 2016. The rise in currency- outside-bank may be attributed to the growing demand for cash balances for spending activities during the festive period. This development would largely compound the liquidity problem associated with TSA implementation and ongoing CBN monetary tightening as deposit money banks might be cash-strapped. Going forward, efforts should be geared towards intensifying initiatives that promote a cashless economy that encourages cashless transactions.