Inflation rises again to 12.8%

Crude oil prices increase above $43 a barrel
Nigeria’s yearly inflation rose to 12.8 per cent last month from 11.4 per cent in February, even as growth projections of the economy remain gloomy.

The National Bureau of Statistics (NBS) said: “The higher price level was reflected in faster increases across all divisions,” adding that it is expecting inflation to end the year at 10.16 per cent, which is above the apex bank’s upper limit target of nine per cent.

“Transportation costs, the planting season, and foreign exchange movements created significant upward pressures on the Food index in March. The Food index increased by 12.7 per cent, up by 1.4 per cent points from rates recorded in February as all major food groups, which contribute to the food sub-index, increased at a faster pace.

“Imported items as well as other domestic shocks continued to have ripple effects across many divisions that contribute to the Core Index. The index increased by 12.2 per cent in March, roughly 1.1 per cent points from rates recorded in February.”

Meanwhile, the Central Bank of Nigeria (CBN) yesterday said plans are underway to raise N167.51 billion through treasury bills next week, with varying maturities ranging from three months to one year.

The debt plan, according to the CBN, would raise N36.78 billion in the three-month category, N35 billion in the six-month paper and N95.73 billion from the one-year debt instrument.

The debt plan is also part of strategies to mop-up excess liquidity in the banking system to curb rising inflation and finance the 2016 budget deficit, as well as help commercial lenders manage their liquidity.

Similarly, the trickling effects of the lingering foreign exchange crisis and scarcity of the Premium Motor Spirit (PMS), as well as the adjustment in the electricity tariffs nationwide, may have been summed up in the rising food prices, which drove inflation to near four-year high of 12.8 per cent in March.

Besides, the inflation’s upward trend, which has been marked by over 100 basis points increase for two consecutive months, has notably defied the liquidity tightening measures of the apex, an indication that it is not demand driven, but cost push inflation.

However, crude oil prices rose above $43 a barrel to its highest level so far in 2016 yesterday, supported by hopes that a meeting of oil producers will agree steps to tackle a supply glut, a weak U.S. dollar and further signs of strong demand in China.

Besides, the Nigerian National Petroleum Corporation (NNPC) has described as erroneous series of allegations of non-remittance of government revenue by various government and non-governmental agencies, saying that it has been very transparent in the management of the country’s oil revenue.

It noted that Natural Resource Governance Institute (NRGI) has admitted that their report on non-remittance of $4.2 billion by the NNPC was wrong and had asked for one week to revert its account, which expired yesterday.

Many members of OPEC plus outside producers are meeting in Doha, Qatar, on Sunday to discuss freezing output.Brent crude was up by 47 cents at $43.30 a barrel yesterday, having reached a 2016 high of $43.58 earlier in the session.

The U.S. West Texas Intermediate (WTI) was up three cents to $40.39 a barrel, off a session peak of $40.91.“The weak dollar is one important reason,” said Eugen Weinberg of Commerzbank. “Also, the fact that we are above $40 and at multi-month highs is also contributing to the price increase as it is prompting some speculative buying.”

Senior Iraqi oil official Falah Alamri, said he was confident the Doha meeting would result in a deal to freeze output, which would signal that prices have bottomed out. Brent hit a 12-year low close to $27 in January.