On Tuesday 15 May 2018, the National Bureau of Statistics (NBS) released Nigeria’s inflation rate for the month of April 2018. According to the data released the rate dropped to 12.48 percent in April from 13.3 percent in March.
The Consumer Price Index (CPI), which measures the average change over time in prices of goods and services consumed by people for day-to-day living, fell by 0.86 percent to 12.5 percent in April. This is the lowest recorded by the country since April 2016.
Food inflation, which is derived from the Food composite index, increased to 14.8 percent from 16.1 percent recorded in March. The rise in the index was caused by increases in prices of potatoes, yam and other tubers, fish, bread and cereals, oil and fats, vegetables and meat.
According to the report, the highest increases were recorded in the prices of fuel and lubricants for personal transport equipment, vehicle spare parts, garments and clothing materials and other articles of clothing and clothing accessories, hairdressing salons and personal grooming establishment, paramedical services and pharmaceutical products.
How the states fared
At the state level, the highest inflation was recorded Kebbi (15.94 percent), Rivers (15.01 percent) and Yobe (14.93 percent), while Kwara (9.77 percent), Delta (10.46 percent) and Benue (11.19 percent) recorded the slowest rise in headline Year on Year inflation.
On a month on month basis, inflation was highest in Kebbi (1.73 percent), Rivers (1.72 percent) and Lagos (1.60 percent), while Bauchi (0.01 percent) recorded the slowest rise and Kaduna and Kano recorded price deflation on a month on month all item basis in April 2018.
During the same period, food inflation on a year on year basis was highest in Kebbi (17.92 percent), Bayelsa (17.85 percent) and Nasarawa (17.71 percent), while Benue (10.95 percent), Kogi (12.27 percent) and Gombe (12.46 percent) recorded the slowest rise.
What this means and what should be expected
Although the headline inflation seems to be sustained largely due to the continued stability in the foreign exchange market. These figures would mean lower yield on treasury bills and other government securities. This could also mean that there could be a drop in interest rates at the next Monetary Policy Committee meeting. This is because, in theory, the drop in inflation should lead to lower rates.
On another hand, it should be expected that the recent herdsmen crisis in Benue, Kogi and environs, which are the food producing states, will also have a negative effect on inflation most especially in food inflation.