Tough times ahead as January inflation soar to 18.72%


January inflation as released by the National Bureau of Statistics shows that life is getting harder for Nigerians.  According to the NBS food and prices of goods are getting out of reach of the poor.

January inflation showed that the index grew from 18.55% in December, 2016 to 18.72% for the month of January.

Nigeria was plunged into a desperate situation after global crude oil price fell by over 70% last year. The Naira (NGN) took a hit crashing by over 53% in the official window and by over 300% in the informal market called the black market.

Since the second quarter of 2016, Nigeria’s inflation has continue to rise. Inflation will continue to rise for many structural reasons that are not checked by the government and the Central Bank of Nigeria’s Forex policy. The lack of transparency, single market and rate for the Forex market has led to the creation of many rates which is a major red flag to investors both at home and abroad.

Nigeria is currently banking on the renewed stability in the price of crude oil, however, there are no immediate respite for Nigeria as the government is still grappling to plug revenue loss from crude oil production due to militant attacks on oil installation.

The Vice President of Nigeria, Acting President Yemi Osinbajo has been on a tour to the Niger Delta region for talks with locals and chief in the region. Should the talks make any headway, Nigeria’s oil production can lift its revenue drive to reduce the pressure on the Naira.

Last week, Nigeria conducted a roadshow to sell a USD1 billion Eurobond to international investors. As predicted by analysts, the bond was oversubscribed by eight fold. Analysts concluded that the Eurobond was oversubscribed because of the attractive interest rate as well as the USD30 billion Forex reserve which was the guarantee for the 15 year note.

January inflation is a pointer to the fact that Nigeria’s economy is not anywhere near a point of recovery.