Nigeria’s economic turmoil is poised to worsen as a new report by the Financial Derivatives Company (FDC) has shown inflation is likely to cross the 12% threshold, a trend which may lead to a recession, causing unavoidable damage to the economy.

The ongoing energy and forex shortages are compounding the woes of businesses, forcing them to cut production levels, and in some cases reduce staff strength.

“We are projecting a significant increase of 0.7% in the March inflation number to 12.1%. This will be the third consecutive monthly increase this year. The month of March was unique as the fuel scarcity intensified and higher transport costs filtered through to commodity prices such as beans, tomatoes and pepper.

“While our initial time series analysis projected an increase of 0.4%, the severity and longevity of the prevailing fuel scarcity has distorted price levels,” the FDC report stated.

Gregory Kronsten, Head of research at FBN Quest, tells BusinessDay that “in general, inflation is bad for the population and most people say it is worse for the low income segment of the population. But the important thing is what the authorities [MPC and CBN] can do about it. Because the increase in inflation is due to a lot of things both bodies cannot control.

“The first is foreign exchange, followed by food production trends, and lastly security, which are all out of the control of the MPC or CBN. The recent inflation figures have been higher than the target range. If there is a shortage in foreign currency, it will lead to a shortage of goods which also fuels inflation.”

A retail study by FDC also showed that “prices of many consumer goods have remained stubbornly high and in some cases, increased inspite of consumer resistance. The factors that are contributing to the spike in inflation include seasonality, cost push factors, money supply and forex shortage. These factors, while transient in nature, are becoming more permanent. As these factors grow increasingly embedded, they are making consumers panic. Anticipated inflation is more important because of the pass through effect of increased demand and expectations of higher prices on current prices.”

Nigeria’s inflation rose by 11.4 percent in February, which is the highest reading since December 2012, as a falling naira keeps pushing import prices up, mainly food. Unemployment rate has also been pushed into double digits at 10.4 percent in the fourth quarter of 2015.

While negative indices continue to rise, economic growth dropped to 2.8 percent in 2015, the slowest since 1999 and has been projected by the International Monetary Fund (IMF) to experience further decline to 2.3 percent in 2016.

Continuous jumps in the inflation rate, according to Tope Oshikoya, CEO of Nextnomics, will make it more difficult for the Central Bank of Nigeria (CBN) to focus on the challenging exchange rate situation the country finds itself in.

“It puts the Central Bank in a difficult position in the sense that if we look within the monetary policy dilemma, you will expect that if inflation does not scale up erratically, then the monetary policy can decide to hold on, on the interest rates and therefore they will concentrate more on exchange and capital rates.

“But if inflation continues to go up, it becomes difficult for them to do what the market is expecting, which is to devalue the naira,” says Oshikoya.

However, Oshikoya thinks the projected jump is not as severe as what was recorded in February, when inflation jumped from 9.6 percent to 11.4 percent, indicating an 18.75 percent increment.

The dichotomy between urban and rural prices may persist, given the impact of rising transport costs and exchange rate pressures on urban prices. The price of diesel, a major determinant of food transportation costs, has increased to N130 per litre.

FDC’s report also noted that “inflation is likely to remain high in April; as exchange rate uncertainty continues, consumer prices are expected to remain high. In addition, with fuel scarcity expected to persist till next month, in spite of the NNPC’s April 7 deadline, transportation costs will continue to be elevated. Therefore, we expect inflation to remain in the region above 11%.

“The FDC Lagos urban inflation index increased by 0.32%, from 10.68% to 11.00%. This was driven by the significant increase of 0.32% in the food basket and a 0.31% jump in the non-food basket. The year-on-year (YoY) food index increased to 12.56% from 12.23%, while the YoY non-food index increased to 10.21%, from 9.90% in February. We expect the ongoing planting season to affect food supply in coming months.”

http://www.financialwatchngr.com/2016/04/08/nigerias-inflation-projected-cross-12-threshold/

Buharinomics

Naija

This administration is synonymous with record breaking.


In a negative way by the way.

Buharinomics is a cancer to the masses. No light, no fuel, no job, no food, even security is a big NO.

there is hope

Its part of change!



In the this era of Change, even cHange is chAnging chaNge along with the chanGing chAngErs.

Infact, our Inflation at the moment will be in 20+% ranges. The widely paraded 12% inflation have been great farce and political.
Consumer goods have witnessed over 30% in prices, Forex in the parallel market has seen over 60% increase.

Buhari has made every wrong move available to him since May 29 and chances are that it can only get worse and nothing seem to be changing. In a sensible society, Buhari wont make a local councilor.

Even when you try to stay patriotic by supporting this govt, you cant seem to find even one positive to dwell on since they assumed power. This is an absolute disaster on all fronts (Economy, electricity, elections, politics, Forex, infrastructure, petrol supply...... etc)

Who is seeing what I am saw with Buharinomics and our Diasporan President with his economic team?

One step forward two steps backwards. Negative news everywhere!

#goingtoseemybirds

Short Term Solution

The present FG has already started slowly but there is still time to get things right by:
-Setting up large scale farms in each state and start cultivating cash crops that they have comparative advantage over others earnestly
-Begin mining other mineral resources that are HOTCAKE in the international market.

Doing these two things and selling them for forex will help reduce pressure on our reserves.

Haba! How will ordinary citizens survive in Nigeria without water, electricity, PMS (fuel), food, adequte security for lives and properties, peace...no money for pockect, no money for bank, no money for circulation, no jobs, even few people wey get half paid jobs no salaries...Nigeria (Niger-Area) na curse? Na wetin our president dey doooooooooooo? " Buhari says he recovered over $90 billion from Diezani, recovered $200 billion loot from Dubai and more than $5 billion from people who secretly returned their loot. That is roughly $ 300 billion. 10 times More than the 2016 budget. More than Nigeria's budget for 15 years put together. Yet Buhari wants to go to China, cap in hand, to beg for a $3 billion loan. The truth is very simple, Buhari has not recovered any loot. The story of loot recovery is designed to keep the gullible busy with nothing while they destroy Nigeria and witch hunt their perceived enemies in the disguise of fighting corruption/ fixing Nigeria." Odikwa very painful, annoying and very serious ooooooooo!

Eeennnn... . . . . . . . . . . . . . . ..

. . . . . . Er sir..... . . . . . . . . . . . . . ..they are rude.. Buharo and osinbanku is doing galigali. Check my signature...

Hmm

Sai buharinomics.. The greatest economic disaster ever!

All these figures just be like further maths to zombies, they no understand one thing for inside. So let me break it down to street language to them :
Things don dey red fa, Nigeria don jagajaga walahi. As e dey be ehn, by June price of everything go don increase. One kulikuli wey be N5 go become 2 for N15, Pure water sef go be N15 per sachet. One milk cup of garri wey be N15 go become N20......na so everything go dey increase by N5 naira.
Infact the only thing wey go increase small na call tariff, they go add only 5kobo to your current plan.
So as una dey talk "sai baba ", make una fear God join oooooo.

Administration of bad records.

Ok

Who is deceiving who? Who doesn't know the current inflation rate in Nigeria now is up to 70% . Make una dey project 12% there.. Between last year to this year, inflation rate has risen up to 70%

Zombies like to say PDP destroyed Nigeria in 16 yrs. If PDP were really aiming to destroy this country... methinks 16 years is too long for them to do that. If the kind of destruction we have seen in the last 10 months has been in force for the last 16 years.... THERE WONT HAVE BEEN A NIGERIA BY NOW. PMB IS GETTING EVERYTHING WRONG.... EVERYTHING

we had slow progress in the last 16 years... what we are seeing now is a very very fast destruction in 10 months. We are actually speeding in reverse

Its like all the alarms are blaring and all the indications are RED! In a plane carrying 170m Nigerians while the pilot is buzy trying to look for his missing cheque book.

By the way... Nigeria isn't 16 years old. APC started this 16 years shit to blindside gullible Nigerians so we can easily forget that BUHARI was once part of the problem.

I dont like GEJ, I dont like PDP... but it will be fair to judge Buhari with his first tenure as military president together with his 10 months and compare it with GEJ 6 years. That will give you an idea of who is a better option

I do hope for a better candidate from any party in the future because as it stands ... we just ditched a frying pan for the fire

In Tinubu's voice there's still hope for Nigeria and dont stop praying for this administration..

Everything going wrong for dullard....

989900:
Any inflation rate above 5%, is an emergency already!

Nigeria has maintained an inflation rate of approximately 6% for the past 20 years..now it is projected to skyrocket to 12%??!!!! Within a few months? This is not good, not good at all!

The painful part is that come 2019 some zombies will forget all dis and still be shouting sai baba!! Vampire suck una brain?

NO b me talk am

Buhari's body odour is not helping matters again. Chaii Chineke help us

5starmilitant:
Buharinomics is a cancer to the masses. No light, no fuel, no job, no food, even security is a big NO.

As an economist, I can decode more danger here.

May God help us out of this mess!

1985 allover

The problem we are facing in Nigeria today is because the present administration decided to run the affairs of this country without seeking advice from the past administration who already knows the situation of the world economy. In any organisation, if there is a change of leadership the current leader is suppose to seek for advice and directions from the predecessor. But in the case of APC, they see all PDP members as their enemies. So tell me, how will they know how to manage the economy since they have never been in power? Or they think leadership is by try and error? Until Buhari bring his head down and seek for advice from Jonathan the problem may continue, untill the present minister of finance seek for advice from the past minister of finance the economy may continue to crumble. The same goes to other positions too. Even if they think their individual predecessors will give them wrong advice, they should first listen to them first, then analyse the advice given to them by the predecessors then make their decision. We cannot continue this way! APC and its governance need to grow up and leave this childish behaviour for the benefit of Nigerian.

U won't see a single zombie in here as dis is d kind of thread dey avoid like ebola victim. D ones who'll eventually enter would do d usual thing of blaming GEJ for the situation and blaming the report on IPOD/IPOB and PDP sympathizers.