The Nigeria’s inflation rate has rebounded in August for the first time since January 2017 after recording 18 consecutive months of downward trend, according to the National Bureau of Statistics (NBS).
In the August inflation report by the statistics bureau on Friday, the nation’s Consumer Price Index (CPI), which measures inflation, rose by 0.09 percent points to 11.23 percent in August.
This implies the prices of goods and services rose at a faster rate in review month – just like June 2018 – when compared with July 2018.
The headline inflation had been on steady decline from 18.72 percent since January 2017 to 11.14 percent in July 2018, this was after it fell to 18.55 percent in December 2016.
In spite of the persistent decline during the period, the macroeconomic variable remained above the Central Bank of Nigeria’s (CBN) acceptable band of 6 percent to 9 percent.
The CPI measures the composite changes in the prices of consumer goods and services, such as food, transportation, and medical care, purchased by households, over a period.
The NBS said food inflation also surged to 13.16 percent YoY in August up from 12.85 percent recorded in previous month, while core inflation, which excludes agricultural produce, dropped from 10.2 percent in July to 10.0 percent in August.
The CBN had expressed fear over the possibility of a rebound in the macroeconomic indicator in the second half of 2018 as a result of increased spending ahead of the 2019 general elections.
In August, the CBN said it may consider raising its key lending rate for the first time in two years if the inflation rate worsens.
The Monetary Policy Committee (MPC) of the CBN in its July meeting had retained the Monetary Policy Rate (MPR) at record-high of 14 percent for the 11th consecutive time since 2016 to monitor the magnitude of the liquidity impact of the fiscal injection and election related expenditure.
The Nigerian Stock Exchange (NSE) is now ranked the worst performing equities market in the African continent as the Year-to-Date (YTD) return of the All-Share Index (ASI) worsened.
The YTD return is the amount of profit generated by an investment since the beginning of the current calendar year.
The latest development was occasioned by rising uncertainties in the Nigerian economy and the recent political developments in the country which undermined investors’ sentiments.
According to the weekly pan-African stock market monitor by a Lagos-based investment house, United Capital Plc., the NSE was the worst performing stock market in Africa having recorded a YTD return of -11.3 percent as at September 3, 2018.
The Nigerian bourse was trailed by the Regional Securities Exchange (BRVM) to emerge the second worst performing stock market in the continent after recording a YTD return of -11.1 percent.
The BRVM, which covers francophone nations in the West African sub-region like Benin, Guinea Bissau, Mali, Togo, Niger, Cote d’lvoire, Burkina Faso and Senegal, offers stock trading services from its headquarters in Abidjan, while its market offices are maintained in each country.
In 2017, the NSE was ranked among the top performing stock markets in Africa, and the exchange was ranked among the five top performers in the year after Argentina, Turkey, Hong Kong and the United States, according to S&P Dow Jones Indices. The NSE-ASI grew by 42.30 percent year-on-year in 2017.
Analysts at United Capital listed Morocco Stock Exchange as the third performing capital market with -7.1 percent YTD return.
The YTD return of the Kenya’s stock market, Nairobi Securities Exchange, dropped to -2.1 percent to emerged the fourth performing bourse in the continent, while South Africa’s stock market, Johannesburg Stock Exchange (JSE), went southwards to -1.3 percent.
Conversely, the Tunis Stock Exchange (TSE) led other exchanges in the continent as its ASI rose by 33.4 percent from the beginning of the year, while Zimbabwe Stock Exchange (ZSE) and Ghana Stock Exchange (GSE) trailed with YTD returns of 21.8 percent and 7.9 percent, respectively.
Analysts at Cordros Capital advised investors in Nigeria’s stock market to trade cautiously in the short to medium term, noting that selloffs were likely to persists.
The analysts attributed the poor performance at the NSE to negative sentiments of investors, particularly the foreign portfolio investors, as a result of “contagion effect of emerging market selloffs and political concerns ahead of the 2019 elections.”
Source: The Ripples