National Bureau of Statistics, NBS, yesterday, said the inflation rate year-on-year (YoY) dropped to 17.78 per cent in February from 18.72 in January, the first decline in 15 months, implying slow-down in the rate of increase in prices of goods and services. However, the development is largely due to a high base effect, rather than any decline in cost of living or doing business.
This came against the backdrop of further increase in the national average price of cooking gas, while kerosene price has started going down. On a monthly basis, however, inflation accelerated by 1.49 per cent month-on-month (MoM) an uptrend from the 1.01 per cent MoM recorded in January. According to the NBS, prices moderated on a YoY basis in all the sub-divisions of the Headline index, with the exception of food inflation.
This was well represented in the food sub-index, which continued on its uptrend for the 16th consecutive month to 18.53 per cent, while the core sub-index declined to 16.00 per cent for the third consecutive month on the back of slower increases in all the key divisions of the sub-index.
Analysts in mixed reaction
Reacting to the turn-around, Head of Research at FSDH Merchant Bank Limited, Mr Ayodele Akinwunmi, told Vanguard that the development was expected as a direct consequence of a high base effect. He, however, cautioned over sustainability of the positive development due to other policy threats and policy compliments, while base effect can only go for the month of March, 2017.
Commenting on the decline in February inflation rate, analysts at Financial Derivatives Company Limited, headed by Bismarck Rewane, projected further decline in the inflation rate subject to the Central Bank of Nigeria sustaining its intervention in the foreign exchange market. Similarly, analysts at WSTC Financial Services Limited, a Lagos-based investment house, believe a downward trend in headline inflation index may have begun if supported with sustained positive developments in monetary policy and the external sector.
Cooking gas prices continue to soar
Meanwhile, a nationwide research report of the NBS has shown that price of Liquefied Petroleum Gas, LPG, otherwise known as cooking gas, has continued to soar, just as price of kerosene witnessed significant drop in the month of February 2017. Vanguard’s investigations also show that the continued upward movements in the price of cooking gas was attributable to the delay in the berthing of LPG product at the ports, as priority was placed on PMS (otherwise known as petrol) and aviation fuel.
According to the NBS report, average price for refilling 5kg cylinder of gas across the country in February increased by 5.48 percent month-on-month and 45.59 percent year-on-year to N2,708.38 in February 2017, up from N2,567.56 in January 2017. The report indicated that the highest average price for the 5kg cylinder was recorded in Edo State at N3,030.00, while Abia, Akwa Ibom, Bayelsa, Cross River, Zamfara, Rivers and Kebbi States recorded N3,000 each and Delta had 2,984.62 average price for the product during the period. However, states with the lowest average price for 5kg cylinder were: Osun – N2, 393.75, Oyo- N2, 376.47 and Ondo – N2, 372.73.
Kerosene price drops
Meanwhile, the average price per litre paid by consumers for kerosene saw a decline by 18.77 percent month-on-month to N352.42 in February 2017 but a year-on-year measure still shows 31.34 percent increase. States with the highest average price per litre of kerosene were Lagos, where it sold at N455, Ogun— N425.44 and Ondo—N424.07.
Surprisingly, in the NBS monthly kerosene Price Watch report, states with the lowest average price per litre were Sokoto where it sold at N295.24, Gombe – N291.67 and Katsina – N286.11, even though they are far from the sea port where the products are discharged. NBS did not give reason for this situation.
For the increases in prices of cooking gas in February, the President, Nigeria Liquefied Petroleum Gas Association (NLPGA), Dayo Adeshina, had blamed the situation on the delay in product berthing at the Port. According to him, “By the time the vessels return to the Pipelines and Products Marketing Company Limited, PPMC terminal, vessels conveying petrol would have berthed. And because Premium Motor Spirit takes precedence over other products, the vessel would have to return to Bonny to load more products, in order not to incur demurrage charges. Unfortunately, in the process of this time lag, prices go up”.