Inflation rate rose in December 2018 for the second consecutive month to 11.44 percent, 0.16 percentage points higher than the 11.28 percent recorded in November 2018.1 The rise in inflation was driven by the food component of inflation which increased to 13.56 percent from 13.30 percent within the same period. Further disaggregated data shows that the highest increments were recorded in the price of basic food items such as bread, cereals, fish, meat, potatoes, yam and other tubers. Core inflation experienced no increment from the previous month, stagnating at 9.80 percent. Seasonal demand effect is closely linked to the rise in inflation given that the holiday season is associated with a rise in the price of food items. In the coming month, we expect the inflation rate to continue on the upward trend considering the increase in election-related spending. The current monetary policy parameters should remain unchanged until a clearer picture of the effect of the election on economic indicators is known
Macroeconomic Report & Economic Updates
This paper was produced as part of a larger project which was jointly financed by the UKDepartment for International Development in Nigeria (through its Policy and Knowledge facility)and the Research Committee of the World Bank.
The external reserves decreased week-on-week marginally by 0.2 percent from June 9, 2017 to June 16, 2017. The reserve declined from $30.27 billion to $30.21 billion. Given that crude oil revenue constitutes the most part of the reserve, the decline may be reflective of the week-on-week drop in global crude oil price (Crude oil price fell by approximately 2 percent to $47.377 per barrel as at June 16 2017). The ongoing forex intervention by the monetary authority also poses a challenge to foreign reserve conservation. Given the unimpressive performance of global oil prices in recent time, there is need to explore other areas with great potentials to generate foreign exchange earnings. Diversification of forex earnings remains the key to insulating foreign reserve against fluctuations in global commodity prices. The country can tap into solid minerals sector as alternative source of foreign exchange. Huge investment together with investor-friendly policies in solid minerals would make the sector attractive to investors.