The Consumer Price Index (CPI), which measures the rate of inflation in the country, reduced to 8.6 per cent year-on-year in March 2013, compared to the 9.5 per cent achieved in February.
The last time the CPI got to its current level was in April 2008, when it stood at 8.2 per cent.
The National Bureau of Statistics (NBS) disclosed this in its CPI report for March obtained by reporters yesterday. In March, the composite CPI increased by 0.71 per cent month-on-month from index levels recorded in February. The relatively slower headline index was primarily attributed to base effects from March of 2012.
Also, in March, the composite Food Index increased year-on-year by 9.5 per cent to 144.6 points. This represented a 1.5 percentage points lower than the 11 per cent recorded in February.
While food prices were higher across all classes in the food sub-index, the largest contributors of the increase in the food index were bread and cereals, potatoes, yams and other tubers, and vegetables.
The NBS explained: “As a result of substantially higher price levels in the March of 2012, the implications are that the year-on-year changes exhibited for March 2013 year are muted. Between February and March of 2012, there were substantial increases in seven, eight and six of the 11 non-food Classification of Individual Consumption according to Purpose (COICOP) divisions in the headline, urban and rural indices.
“This resulted in the Core index increasing from 11.9 per cent in February 2012 to 15 per cent in March 2012. It should be noted that the Headline Index is made up of the Core Index and Farm Produce items. As Processed Foods are included in both the Core and Food sub-indices, this implies that these sub-indices are not mutually-exclusive.”
The Urban composite CPI also stood at 142.8 per cent in March, which was a 9.3 per cent year-on-year change. This was lower than the 9.8 per cent recorded in February.
London-based Emerging Markets Strategist at Standard Bank Plc, Mr. Samir Gadio, argued that the development would support Nigeria’s bonds, which, according to him, had “moderately lost ground since early April.”
“We are now in a more bearish market environment characterised by a relatively significant decline in the oil price in recent weeks and a negative shift in global sentiment. In such a context, we suspect a meaningful contraction in bond yields from current levels on the March CPI figure looks somewhat unlikely.
“In fact, a further fall in the oil price will have the adverse effect, especially if it triggers more naira weakness, as this will lead the CBN to squeeze liquidity aggressively. The concern is also that some foreign investors may lighten up their FGN bond exposure amid less conducive external conditions,” he added.
On her part, the Regional Head of Research, Africa, Standard Chartered Bank, Razia Khan, pointed out that if the improvement in inflation is sustained, then the risk of easing would be higher.
“Any emergence of pressure on the forex rate might complicate the inflation outlook, and keep the CBN on hold a while longer,” she added.
The last time the CPI got to its current level was in April 2008, when it stood at 8.2 per cent.
The National Bureau of Statistics (NBS) disclosed this in its CPI report for March obtained by reporters yesterday. In March, the composite CPI increased by 0.71 per cent month-on-month from index levels recorded in February. The relatively slower headline index was primarily attributed to base effects from March of 2012.
Also, in March, the composite Food Index increased year-on-year by 9.5 per cent to 144.6 points. This represented a 1.5 percentage points lower than the 11 per cent recorded in February.
While food prices were higher across all classes in the food sub-index, the largest contributors of the increase in the food index were bread and cereals, potatoes, yams and other tubers, and vegetables.
The NBS explained: “As a result of substantially higher price levels in the March of 2012, the implications are that the year-on-year changes exhibited for March 2013 year are muted. Between February and March of 2012, there were substantial increases in seven, eight and six of the 11 non-food Classification of Individual Consumption according to Purpose (COICOP) divisions in the headline, urban and rural indices.
“This resulted in the Core index increasing from 11.9 per cent in February 2012 to 15 per cent in March 2012. It should be noted that the Headline Index is made up of the Core Index and Farm Produce items. As Processed Foods are included in both the Core and Food sub-indices, this implies that these sub-indices are not mutually-exclusive.”
The Urban composite CPI also stood at 142.8 per cent in March, which was a 9.3 per cent year-on-year change. This was lower than the 9.8 per cent recorded in February.
London-based Emerging Markets Strategist at Standard Bank Plc, Mr. Samir Gadio, argued that the development would support Nigeria’s bonds, which, according to him, had “moderately lost ground since early April.”
“We are now in a more bearish market environment characterised by a relatively significant decline in the oil price in recent weeks and a negative shift in global sentiment. In such a context, we suspect a meaningful contraction in bond yields from current levels on the March CPI figure looks somewhat unlikely.
“In fact, a further fall in the oil price will have the adverse effect, especially if it triggers more naira weakness, as this will lead the CBN to squeeze liquidity aggressively. The concern is also that some foreign investors may lighten up their FGN bond exposure amid less conducive external conditions,” he added.
On her part, the Regional Head of Research, Africa, Standard Chartered Bank, Razia Khan, pointed out that if the improvement in inflation is sustained, then the risk of easing would be higher.
“Any emergence of pressure on the forex rate might complicate the inflation outlook, and keep the CBN on hold a while longer,” she added.
