Nigeria's rebased January inflation drops to 24.48%

Guardian Nigeria

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00:00Nigeria's rebased headline inflation fell to 24.48% year-on-year in January

00:06this year. The data by the National Bureau of Statistics shows that urban

00:09inflation stood at 26% while rural inflation came in at 22.15%.

00:15Bankole Odusoya, Chief Dealer at Polaris Bank, joins me to unpack these numbers

00:19and the impact our monetary policy decision, of course he's still our guest

00:23here for today. Bankole, thank you so much for sticking with us. Let's get your

00:28initial thoughts. We all knew the numbers were going to drop but did you

00:32expect to see 24.48% from 34.8%? Thank you very much Esther. We knew it was going to drop and then we knew that the

00:42government had spoken about 15% earlier. We doubted if it was going to be that

00:46kind of sharp drop but this just sounds modest enough. It shows that

00:51inflation prices are still moving at 24% compared to the outdated 34 that we

00:59had. So basically it was expected, anticipated, foreguidance was given and market

01:04had even to some extent reacted to that. Because the MBS did also provide

01:11rationale. They said a major factor responsible for the

01:15decline was the base year being closer to the current period in 2024-2025. But

01:21for the fiscal authorities, because opinions have been mixed on these

01:24numbers and we don't want to involve sentiments, we want to look at the data

01:27and see the rationale and all of that. But for the fiscal authorities, let me

01:31go there, how should they interpret this data? Because that's the whole point of

01:34the data, they want to know the true reflection of consumer

01:38spending habits and just what the data says about the true state of the

01:42economy. What should they do with this data? This is more reflective of reality. We've

01:48thought that food was already overweight, now we're bringing in energy

01:52pricing. If you see what happened on the transport sector, we saw that it moved

01:56over 10% from about 3% to about 13%. So that reflects more what has

02:02happened with our deregulation on petrol prices because that has direct impact on

02:07the transport costs. So basically it's more reflective. And then we saw a

02:12reduction from food shifting into eating out culture, restaurants, and

02:20that improved also. So we saw growth from transport and growth on the

02:24restaurants and eateries and then the hospitality business. So that's

02:28more reflective of what the country has become. And then for the fiscal

02:32authorities, it helps them calculate how, of course it dovetails into what's going

02:37to happen on the GDP rebasing also, because for GDP we're looking at

02:42consumption patterns, investment, and government expenditure into these very

02:50relevant sectors that have been identified. And then how much of this can

02:54we export of our product, can we export services and then get some export

02:59proceeds from. So basically it expands our view. So for the fiscal views

03:07expanded and then we've seen more data that is more reflective of reality.

03:11It's more reflective. I mean that was the whole essence of the exercise. Now for the

03:14monetary authorities, I mean the CBN has since last year there's a 15% inflation

03:20target for this year. Does it make it seem less far-fetched now if we're

03:25somewhere around 24%? Also, and we understand that that was one of the

03:29reasons why we saw that postponement. The NPC wanted to have these numbers

03:34released, both the CBI, CPI and the GDP. What kind of comments are you expecting

03:39to hear from the governor tomorrow regarding these numbers? Market sentiment,

03:45most speakers that we've listened to are thinking the government will be cautious

03:52in making a move on interest rates for now. They would emphasize caution in that

03:59if you look at the calendar in itself, there's going to be a policy committee meeting this

04:05month. Ordinarily you would have expected another one in April but the next one has

04:09been shifted to May. So the body language there seems to be the monetary policy committee

04:16wanting to have enough time to react, to see a full view of a quarter. This is January data

04:23that we're talking about. Let's see February, March and April and then react in May 20.

04:29So it seems like the policy committee could hold on rates are a major decision but

04:37traders would also want to hedge their bets on their risk, you know, in a situation where

04:43there's a surprise cut. That is still on the table.

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