Consumer prices for the month of December 2019 increased by 0.13 percentage points from the preceding month which stood at 11.85% 1. This rate was 0.54% percentage points higher than December 2018. The rise in inflation was driven by a rise across all components, with the core sub-index growing by 0.34% to 9.33% and food sub-index by 0.19% to 14.67% over a month. The rise in inflation was driven in part by an increase in access to credit, as indicated in the Central Bank of Nigeria Credit Condition Survey. The survey conducted notes that there was an increase in supply of secured loans to households which was expected to increase in Q1 2020 as well as a rise in overall credit supply to the corporate sector2. Inflation is expected to rise in the coming months given that the closure of the Nigeria-Benin border has driven food prices upwards resulting in cost-push inflation. In addition, the CBN’s directive to commercial banks to give out 60% of their deposits as loans to the real sector could potentially lead to demand-pull inflation. Given that food inflation is at the core of the rising inflation, initiatives should be put in place by both state and non-state actors to increase the productivity of farmers in order to transition farmers from smallholder to large-scale farming.
February 11, 2020
Nigeria Economic Update (Issue 04)
Recently released World Economic Outlook by the International Monetary Fund (IMF) projects economic activities to increase significantly in developing countries- especially Nigeria. Annual real output is expected to grow by 0.8 percent in 2017 from the contraction of 1.5 percent in 20161. Improvement in economic activities is hinged on prospective favorable effects of continued increase in commodity export price (Crude oil is expected to increase to $55 per barrel in 2017 compared to $46 in 2016).