Wednesday November 22 2017
Nigeria Holds Interest Rate Steady at 14%
Central Bank of Nigeria | Stefanie Moya | stefanie.moya@tradingeconomics.com

The central bank of Nigeria left its benchmark interest rate unchanged at 14 percent on November 21st 2017, in line with market expectations. Policymakers noticed the economic recovery is still fragile and expressed that inflation should be tracked for future monetary policies. Eight of the nine members of the monetary policy committee voted to hold rates, while one voted for a cut.

Excerpts from the Statement by the Central Bank of Nigeria:

Forecasts of key macroeconomic variables indicate a positive outlook for the economy up to Q1 2018. This is predicated on continued implementation of the 2017 budget into early 2018, anticipated improvements in government revenue from the implementation of the Voluntary Asset and Income Declaration Scheme (VAIDS) as well as favourable crude oil prices. The 7 development finance initiatives by the CBN in the real sector, particularly in agriculture, are expected to continue to yield positive results in terms of output expansion and job creation.

Focusing on the downside risks to the outlook, the Committee noted the low fiscal buffers and weak aggregate domestic demand. On the external front, widening global imbalances, and rising geo-political tensions were some of the crucial risks identified.

The Committee was, however, of the view that policy makers must not relent in their aggressive policy initiatives aimed at continuing the positive growth trajectory. The Committee was also concerned about potential adverse external developments and the cautious approach to lending and financial intermediation by domestic deposit money banks.

The Committee noted the significant contribution of food prices to headline inflation and observed that the benefit of base effect on overall headline inflation had substantially dwindled. Members, however, expressed confidence that the tight stance of monetary policy and the stability in the exchange rate of the naira should continue to positively weigh in on price developments. The Committee reaffirmed its commitment to maintaining price stability, which is crucial to sustainable economic growth and development.

While tightening would strengthen the impact of monetary policy on inflation with complementary effects on capital inflows and exchange rate stability, it nevertheless could also potentially dampen the positive outlook for growth and financial stability. On the other hand, whereas loosening would strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing, it could aggravate upward trend in consumer prices and generate exchange rate pressures. The Committee also feels that loosening would worsen the current 10 account balance through increased importation.

On the argument to hold, the Committee believes that key variables have continued to evolve in line with the current stance of macroeconomic policy and should be allowed to fully manifest. Members noted that the developments in output and inflation in particular required effective close monitoring in order to gain clarity on the medium term optimal path of monetary policy.

In summary, the MPC decided to:

(i) Retain the MPR at 14.0 per cent;

(ii) Retain the CRR at 22.5 per cent;

(iii) Retain the Liquidity Ratio at 30.0 per cent

(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.




Monday November 20 2017
Nigeria GDP Grows 1.4% YoY in Q3
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Nigerian economy advanced 1.4 percent year-on-year in the third quarter of 2017, accelerating from an upwardly revised 0.72 percent growth in the previous period. It is the second consecutive quarter of expansion as oil production continued to recover.

The oil sector surged 25.89 percent year-on-year, following an upwardly revised 3.53 percent increase in the previous period. The country produced 2.03 million barrels of crude oil per day, up from 1.61 mbpd a year earlier. As a result, the oil sector accounted for 10.04 percent of GDP compared to 8.09 percent a year earlier. The non-oil sector declined 0.76 percent, compared to a 0.44 percent growth in the previous period. 

Output expanded faster for mining and quarrying (25.44 percent vs 3.51 percent); agriculture (3.06 percent vs 3.01 percent) and recovered for food and accomodation services (0.18 percent vs -4.05 percent) and arts, entertainment and recreation (0.44 percent vs -0.62 percent). In addition, output growth slowed for: electricity, gas, steam and air conditioning supply (11.46 percent vs 35.50 percent) and water supply, sewerage, waste management and remediation (0.33 percent vs 3.45 percent). In contrast,  contraction was observed for: manufacturing (-2.85 percent vs 0.64 percent in Q2); construction (-0.46 percent vs 0.13 percent); internal trade (-1.74 percent vs -1.62 percent); transportation and storage (-6.25 percent vs -6.18 percent); information and telecommunication (-4.48 percent vs -1.15 percent); financial and insurance (-5.96 percent vs 10.45); real estate activities (-4.12 percent vs -3.53 percent); public administration (-0.72 percent vs 1.63 percent); education (-1.22 percent vs -1.34 percent) and social services (-0.85 percent vs -0.96 percent).

On a quarterly basis, the economy expanded 8.97 percent, following an upwardly revised 3.40 percent rise in the previous quarter. 




Wednesday November 15 2017
Nigeria Inflation Rate Edges Down to 15.91% in October
National Bureau of Statistics | Marta Dubiel | marta.dubiel@tradingeconomics.com

Consumer prices in Nigeria increased 15.91 percent year-on-year in October 2017, easing from 15.98 percent in September and in line with market expectations of 15.9 percent. The inflation slowed for the ninth consecutive month to its lowest level since May 2017 due to lower prices of education and housing utilities. Meantime, food inflation hit its highest level since July 2008 and transport prices increased further.

Year-on-year, consumer prices eased mostly for education (11.8 percent compared to 12.7 percent) and housing and utilities (8.5 percent compared to 8.8 percent). In addition, a slowdown was recorded for clothing and footwear (15.6 percent compared to 15.8 percent); alcoholic beverages, tobacco and kola (8.8 percent compared to 8.9 percent) and communication (2.7 percent compared to 2.8 percent). Also, inflation edged down for recreation and culture (10.0 percent compared to 10.1 percent). On the other hand, main upward pressure came from the rising cost of food and non-alcoholic beverages (21.3 percent compared to 20.3 percent) and transport (12.2 percent compared to 12.0 percent). In addition, prices rose at a faster pace for furnishings and household equipment (13.6 percent compared to 13.4 percent); health (11.2 percent compared to 11.1 percent); restaurants and hotels (10.2 percent compared to 9.9 percent) and miscellaneous goods and services (11.4 percent compared to 11.2 percent).

Among food items, main increases were recorded in prices of potatoes, yams and other tubers, meat, oil and fats, dairy products, bread and cereals, coffee, tea and cocoa, fish and vegetables.

Annual core inflation which excludes price of volatile agricultural products increased to 12.14 percent from 12.12 percent in the previous month.

On a monthly basis, consumer prices rose 0.76 percent, following a 0.78 percent increase in September.




Tuesday October 17 2017
Nigeria Inflation Rate Lowest in 16 Months
National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

Consumer prices in Nigeria increased 15.98 percent year-on-year in September of 2017, dropping slightly from 16.01 percent in August and in line with market expectations of 16 percent. The inflation slowed for the eighth consecutive month to its lowest level since May of 2016, as prices rose at a softer pace for housing and utilities, and clothing and footwear. Meantime, food inflation hit its highest level since July 2008 and transport prices rose further.

Year-on-year, prices advanced at a slower pace for housing and utilities (8.8 percent compared to 9.2 percent in August); clothing and footwear (15.8 percent compared to 15.9 percent); education (12.7 percent compared to 13.9 percent); alcoholic beverages, tobacco and kola (8.9 percent compared to 9.2 percent) and communication (2.8 percent compared to 2.9 percent). On the other hand, prices increased at a faster pace for food and non-alcoholic beverages (20.32 percent compared to 20.25 percent); transport (12 percent compared to 11.8 percent); furnishings and household equipment (13.4 percent compared to 13 percent); health (11.1 percent compared to 10.9 percent); miscellaneous goods and services (11.2 percent compared to 10.9 percent); restaurants and hotels (9.9 percent compared to 9.5 percent) and recreation and culture (10.1 percent compared to 10 percent).

Among food items, increases were mainly seen in prices of potatoes, yams and other tubers, milk cheese and eggs, bread and cereals, coffee tea and cocoa, soft drinks, fish, meat and oil and fats.

Annual core inflation which excludes prices of volatile agricultural products decreased to 12.12 percent from 12.30 percent in August.

On a monthly basis consumer prices rose 0.78 percent , following a 0.97 percent increase in August.


Wednesday September 27 2017
Nigeria Holds Interest Rate Steady at 14%
Central Bank of Nigeria | Stefanie Moya | stefanie.moya@tradingeconomics.com

The central bank of Nigeria left its benchmark interest rate unchanged at 14 percent on September 26th 2017, in line with market expectations. Policymakers showed concerns regarding high food prices and noticed the economic recovery is still fragile. Six of the seven members of the monetary policy committee voted to hold rates, while one voted for a cut.

Excerpts from the Statement by the Central Bank of Nigeria:

Available data and forecast of key macroeconomic variables indicate a relatively positive outlook, predicated on existing policy initiatives including the ERGP. Other potential drivers of economic recovery are; the expected increase in government revenue arising from favourable crude oil prices, stable output, and general improvements in the non-oil sector, especially, agriculture, industry and construction. The intervention by the CBN in the real sector is expected to continue to yield positive results in terms of output and lower consumer prices.

The Committee, however, noted some downside risks to the overall short to medium-term positive outlook for the economy. These include; flooding which displaced farming communities and political agitations. On the external front, the hawkish policy stance in the United States, rising geo-political tensions and sluggish output recovery in the Euro-area and Japan, could slowdown the momentum of global output growth, with significant spillovers to emerging markets and developing countries, including Nigeria.

The Committee, however, expressed concern on the sustained pressure on food prices, noting risks posed by floods, strikes and insurgencies in various parts of the country to food production and distribution. Regarding the tepid turnaround in economic activities in the second quarter of 2017, the Committee emphasized that the employment gains of recovery were still minimal, noting that a number of important job elastic sub-sectors were still weak and may require more fiscal support to regain traction. 

With respect to loosening, the Committee believed that although while it would make it more attractive for Nigerians to acquire assets at cheaper prices, thus increasing their net wealth, and therefore stimulate spending as confidence rises, it nevertheless, felt constrained that loosening at this time would exacerbate inflationary pressures and worsen the exchange rate and inflationary conditions. The Committee also felt that loosening will further pull the real rate deeper into negative territory as the gap between the nominal interest rate and inflation widens.

On the argument to hold, the Committee believes that the effects of fiscal policy actions towards stimulating the economy have begun to manifest as evident in the exit of the economy from the fifteen-month recession. Although still fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery. Secondly, the Committee was of the view that economic activity would become clearer between now and the first quarter of 2018, when growth is expected to have sufficiently strengthened and gains in receding inflation, very obvious. The most compelling argument for a hold was to achieve more clarity in the evolution of key macroeconomic indicators including budget implementation, economic recovery, exchange rate, inflation and employment generation.

In summary, the MPC decided to:
(i) Retain the MPR at 14.0 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.0 per cent
(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.



Friday September 15 2017
Nigeria Inflation Rate Falls Slightly to 16.01% in August
National Bureau of Statistics | Marta Dubiel | marta.dubiel@tradingeconomics.com

Consumer Prices in Nigeria increased 16.01 percent year-on-year in August of 2017, following a 16.05 percent rise in July and in line with market expectations of 16 percent. It is the seventh consecutive decline in inflation and a new low since May of 2016. The highest increases were seen in prices of clothing materials and articles of clothing, garments, passenger transport by air, motorcycles, shoes and other footwear. On the other hand, food inflation edged down to 20.25 percent from 20.28 percent in July which was the highest since the new CPI series began in 2009.

Year-on-year, prices rose less for housing and utilities (9.15 percent compared to 9.56 percent in July); education (13.89 percent compared to 14.99 percent), alcoholic beverages, tobacco and Kola (9.22 percent compared to 9.50 percent) and communication (2.94 percent compared to 3.04 percent).  On the other hand, prices rose faster for transport (11.82 percent compared to 11.74 percent), clothing and footwear (15.92 percent compared to 15.77 percent) and restaurants and hotels (9.46 percent compared to 8.77 percent).

Among food items, increases were mainly seen in prices for bread and cereals, meat, fish, oils and fats, milk cheese and eggs, coffee, tea and cocoa.

Annual core inflation which excludes prices of volatile agricultural products increased to 12.30 percent from 12.21 percent in July.

On a monthly basis, consumer prices rose 0.97 percent, following a 1.21 percent increase in July. 


Tuesday September 05 2017
Nigeria Returns to Growth in Q2
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Nigerian economy advanced 0.55 percent year-on-year in the second quarter of 2017, after shrinking an upwardly revised 0.91 percent in the previous period. It is the first expansion in five quarters as the oil sector rebounded.

The oil sector went up 1.64 percent year-on-year, the first expansion since the third quarter of 2015, following an upwardly revised 15.60 percent drop in the previous period. The country produced 1.84 million barrels of crude oil per day, up from 1.81 mbpd a year earlier. As a result, the oil sector accounted for 8.89 percent of GDP compared to 8.79 percent a year earlier.

The non-oil sector advanced 0.45 percent, easing from a 0.73 percent increase in the previous period. Output growth slowed for: manufacturing (0.64 percent vs 1.36 percent in Q1); construction (0.13 percent vs 0.15 percent); water supply, sewerage, waste management and remediation (3.45 percent vs 12.63 percent) and agriculture (3.01 percent vs 3.39 percent). In addition, production declined for: transport (-6.18 percent vs 10.55 percent); trade (-1.62 percent vs -3.08 percent); accomodation and food services (-4.05 percent vs -3.96 percent); information an communication (-1.15 percent vs 2.73 percent); arts, entertainment and culture (-0.62 percent vs 11.67 percent) and real estate activities (-3.53 percent vs -3.10 percent).

In contrast, electricity, gas, steam and air conditioning (35.50 percent vs -5.04 percent) and public administration (1.63 percent vs -2.07 percent) recovered, while finance and insurance rose sharply (10.45 percent vs 0.67 percent).

On a quarterly basis, the economy expanded 3.23 percent.


Monday August 28 2017
Nigeria Inflation Rate Edges Down to 16.05% in July
National Bureau of Statistics | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Nigeria increased 16.05 percent year-on-year in July of 2017, easing slightly from a 16.1 percent rise in June and compared to market expectations of 16 percent. It is the lowest reading since May of 2016 amid a slowdown in cost of housing and energy. On the other hand, food inflation hit the highest since the new CPI series began in 2009.

Year-on-year, prices rose less for housing and utilities (9.56 percent compared to 10.93 percent in June); transport (11.74 percent compared to 12.24 percent); education (14.99 percent compared to 16.04 percent) and alcoholic beverages and tobacco (9.5 percent compared to 9.89 percent). On the other hand, inflation rose for food (20.28 percent compared to 19.91 percent), mainly due to higher prices of bread and cereals, meat, fish, oils and fats, coffee, tea and cocoa, potatoes yam and other tubers and vegetables. Additional upward pressure came from cost of clothing and footwear (15.77 percent compared to 15.71 percent); furnishings and household equipment maintenance (12.27 percent compared to 11.25 percent); health (10.29 percent compared to 9.41 percent); miscellaneous goods and services (10.43 percent compared to 10.29 percent) and restaurants and hotels (8.77 percent compared to 8.02 percent).

Annual core inflation which excludes prices of volatile agricultural products eased to 12.21 percent from 12.46 percent in June. 

On a monthly basis, consumer prices increased 1.21 percent, below 1.58 percent in June. 


Tuesday July 25 2017
Nigeria Holds Key Rate At 14%
Joana Taborda | joana.taborda@tradingeconomics.com

The central bank of Nigeria left its benchmark interest rate steady at 14 percent on July 25th 2017, in line with market expectations, mentioning the headwind confronting the economy and global uncertainties. Six of the eight members of the monetary policy committee voted to hold rates, while two voted for a cut. The inflation slowed for 16.1 percent in June, the lowest in 13 months.

Excerpts from the Statement by the Central Bank of Nigeria:

The Monetary Policy Committee met on the 24th and 25th of July 2017, against the backdrop of a relatively improving global economy. However, protectionism in trade and immigration fragilities in the financial markets, remain the key risks to global economic stability. On the domestic front, the economy is on a path to moderate recovery with a positive short- to medium-term outlook, premised largely on fiscal stimulus and a stable naira exchange rate. Inflation expectations also appear sufficiently anchored with the current stance of monetary policy.

Notwithstanding the improved outlook for growth, the Committee assessed the implications of the uncertainties arising from the continued normalization of monetary policy by the US Fed and the implications of a strong dollar, the weak recovery of commodity prices, and the uncertainty of US fiscal policy. The Committee similarly evaluated other challenges confronting the domestic economy and the opportunities for achieving economic growth and price stability in 2017.

The Committee expressed satisfaction with the gradual but consistent decline in inflationary pressures in the domestic economy, noting its substantial base effect, continuous improvements in the naira exchange rate across all segments of the foreign exchange market, and considerable signs of improved investments inflows. The Committee welcomed the move by the fiscal authorities to engage the services of asset-tracing experts to investigate the tax payment status of 150 firms and individuals in an effort to close some of the loopholes in tax collection, towards improving government revenue. However, the Committee expressed concern about the slow implementation of the 2017 Budget and called on the relevant authorities to ensure timely implementation, especially, of the capital portion in order to realize the objectives of the Economic Recovery and Growth Plan.

The MPC thinks that easing at this point would signal the Committee’s sensitivity to growth and employment concerns by encouraging the flow of credit to the real economy. It would also promote policy consistency and credibility of its decisions. Also, the Committee observed that easing at this time would reduce the cost of debt service, which is actually crowding out government expenditure. The risks to easing however, would show in terms of upstaging the modest stability achieved in the foreign exchange market, the possible exit of foreign portfolio investors as well as a resurgence of inflation following the intensified implementation of the 2017 budget in the course of the year. The Committee also reasoned that easing would further pull the real interest rate down into negative territory.

The argument for holding is largely premised on the need to safeguard the stability achieved in the foreign exchange market, and to allow time for past policies to work through the economy. Specifically, the MPC considered the high banking system liquidity level; the need to continue to attract foreign investment inflow to support the foreign exchange market and economic activity; the expansive outlook for fiscal policy in the rest of the year; the prospective election related spending which could cause a jump in system liquidity, etc. 

In summary, the MPC decided to:
(i)  Retain the MPR at 14 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.00 per cent;
(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.


Monday July 17 2017
Nigeria Inflation Rate Lowest In Over 1 Year
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Nigeria increased 16.10 percent year-on-year in June of 2017, the least in 13 months, compared to 16.25 percent in the previous month. it was the fifth consecutive month of decline in inflation rate as non-food prices grew less.

Compared to June of 2016, prices slowed for: housing & utilities (10.93 percent vs 12.91 percent in May); clothing and footwear (15.71 percent vs 16.31 percent); transport (12.24 percent vs 13.26 percent); furniture & household equipment (11.25 percent vs 11.35 percent); education (16.04 percent vs 16.25 percent); health (9.41 percent vs 9.47 percent); alcoholic beverages, tobacco and Kola (9.89 percent vs 11.04 percent) and communication (3.28 percent vs 3.65 percent).

In contrast, food inflation hit the highest since February of 2009 (19.91 percent vs 19.27 percent) as cost rose faster for meat, bread and cereals, fish, potatoes, yam and other tubers, oils and fats, milk, cheese, eggs, coffee, tea and cocoa. Also, prices grew more of: miscellaneous goods & services (10.29 percent vs 10.09 percent); recreation and culture (9.93 percent vs 9.81 percent) and restaurants and hotels (8.02 percent vs 7.84 percent).

Annual core inflation rate eased to 12.50 percent, the lowest since March last year,  from 13.02 percent  in the previous month.

On a monthly basis, consumer prices rose 1.58 percent, compared to a 1.88 percent increase in May, as cost went up at a slower pace for: food (1.99 percent vs 2.54 percent); housing and utilities (0.74 percent vs 0.89 percent); clothing and footwear (1.59 percent vs 1.69 percent); recreation and culture (0.66 percent vs 1.32 percent); miscellaneous goods and services (1.14 percent vs 1.20 percent); alcoholic beverages, tobacco and Kola (0.75 percent vs 0.96 percent) and communication (0.25 percent vs 0.39 percent).