For the 18th unbroken month, inflation rate continued a downward trajectory, declining from 11.23 per cent in June to 11.14 per cent in July.
This is coming as the Central Bank of Nigeria (CBN) intensified its public enlightenment drive on its currency swap policy, explaining that a major objective of the recent Bilateral Currency Swap Agreement (BCSA) it sealed with the People’s Bank of China (PBoC) was to ease the pressure on Nigeria’s foreign reserves.
In its latest figures, the National Bureau of Statistics (NBS) said the Consumer Price Index (CPI), which measures inflation stood at 11.14 per cent (year-on-year) in July 2018, representing a 0.09 percentage points drop over the rate recorded in June 2018 (11.23) per cent.
The 18th consecutive disinflation (fall in inflation) in headline inflation year-on-year also recorded increases in all Classification of Individual Consumption by Purpose (COICOP).
COICOP is used to classify both individual consumption expenditure and actual individual consumption.
On month-on-month basis, the headline index increased by 1.13 per cent in July 2018, down by 0.11 per cent points from the rate recorded in June 2018 (1.24 per cent).
This represents the first-time month-on-month, headline inflation decline since February 2018.
The percentage change in the average composite CPI for the 12 months period ending July 2018 over the average of the CPI for the previous 12 months period was 13.95 per cent, showing 0.42 per cent point from 14.37 per cent recorded in June 2018.
The urban inflation rate eased by 11.66 per cent (year-on-year) in July 2018 from 11.68 per cent recorded in June 2018, while the rural inflation rate remained flat at 10.83 per cent in July 2018 from 10.83 per cent in June 2018.
On a month-on-month basis, the urban index rose by 1.23 per cent in July 2018, down by 0.01 from 1.24 per cent recorded in June, while the rural index also rose by 1.18 per cent in July 2018, down by 0.05 per cent from the rate recorded in June 2018 (1.23) per cent.
The corresponding twelve-month year-on-year average percentage change for the urban index was 14.33 per cent in July 2018.
This was less than the 14.71 per cent reported in June 2018, while the corresponding rural inflation rate in July 2018 was 13.64 per cent compared to 14.08 per cent recorded in June 2018.
The composite food index rose by 12.85 per cent in July 2018 compared to 12.98 per cent in June 2018.
This represents the tenth consecutive decline in year-on-year food inflation since September 2017.
This rise in the food index was caused by increases in prices of potatoes, yam and other tubers, vegetables, Bread and cereals, fish, oils and fat and fruits.
On month-on-month basis, the food sub-index increased by 1.40 per cent in July 2018, down by 0.17 per cent points from 1.57 per cent recorded in June.
This represents the first-time month on month food inflation has declined since February 2018.
The average annual rate of change of the Food sub-index for the 12-month period ending July 2018 over the previous twelve-month average was 17.10 per cent, 0.65 per cent points from the average annual rate of change recorded in June (17.75) per cent.
The ”All items less farm produce’ or core inflation, which excludes the prices of volatile agricultural produce stood at 10.2 per cent in July 2018, down by 0.2 per cent from the rate recorded in June 2018 (10.4) per cent.
This represents the 16th consecutive decline in year-on-year core inflation since March 2017.
On month-on-month basis, the core sub-index increased by 0.81 per cent in July 2018.
This was down by 0.22 per cent when compared with 1.03 per cent recorded in June 2018.
The highest increases were recorded in prices of medical services, carpets and other floor coverings, vehicle spare parts, domestic services and household services.
Others are pharmaceutical products, paramedical services, hairdressing saloons and personal grooming establishment, dental services, cars and fuels and lubricants for personal transport equipment.
The average 12-month annual rate of change of the index was 11.48 per cent for the twelve-month period ending July 2018.
This is 0.17 per cent points lower than 11.65 per cent recorded in June.
CBN Intensifies Enlightenment on Bilateral Currency Swap
Meanwhile, the CBN has explained that a major objective of the recent Bilateral Currency Swap Agreement (BCSA) it sealed with the People’s Bank of China (PBoC) was to ease the pressure on Nigeria’s foreign reserves.
It also disclosed that physical cash would not be involved in transactions under the agreement, even as it dismissed fears of possible flooding of the Nigerian market with sub-standard Chinese products.
The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, who made the remarks in Abuja, yesterday at a sensitisation exercise for the business community on the swap deal, said the enlightenment exercise was borne out of the realization that the CBN can only succeed in its activities by partnering with agencies and players in both the public and private sectors of the economy.
He noted that the sensitisation of the business community on the BCSA under the auspices of the Abuja Chamber of Commerce and Industry was imperative.
Okorafor recalled that the Nigerian economy was hit by what he described as a ‘financial storm’ in 2014, culminating in the plunge in oil prices and the continuing precipitous fall which impacted negatively on government revenue in 2015, 2016 and 2017, thereby creating heavy pressure on foreign reserves.
He noted that the situation got to a point where receipts into the foreign reserves nosedived from $5 billion to $500 million.
Okorafor noted that the pressure on the foreign reserves impacted rather negatively on the value of the local currency.
Faced with the quest to find solutions to the mounting challenges occasioned by the fall in revenue and the pressure on the depleting reserves, he said the CBN came up with a number of measures, including the 41-items list.
The Importers and Exporters (I&E) window, among others, he said, were introduced to tackle the foreign exchange challenges.
Okorafor stated that the BCSA between the CBN and the PBoC was another resolve to ease the pressure on the reserves by eliminating a third currency for businesses transacted between China and Nigeria.
According to him, under the deal worth $2.5 billion, the CBN paid an equivalent N720 billion to the PBoC for 15 billion Chinese Renminbi.
He urged businessmen, importers and exporters to embrace the swap deal for seamless transactions with China.
Earlier, the President, Abuja Chamber of Commerce and Industry, Prince Adetokunbo Kayode had observed that BCSA was a good one for businesses in the country.
According to him, the currency swap deal has the potential of engendering economic growth, if pursed, and urged business people to key in.