The Consumer Price Index (CPI) maintained an upward trend to 12.13% (YoY) in the month of January 2020, a rise of 0.15 percent points as reported by The National Bureau of Statistics(NBS) from 11.98% in December 2019. This is the fifth consecutive rise since September 2019.
Food inflation (Y-o-Y) followed in the same trajectory in Jan’ 20 to 14.85%, a 0.18 percent points from 14.67% in Dec’19. The rise in food index was due to increase in the prices of Bread and Cereals, Meat, Oils and fats, Potatoes, Yam and other tubers and Fish.
Core inflation which excludes the prices of volatile agricultural produce stood at 9.35 %(YoY) in January 2020, higher by 0.02 percentage points (Dec’19: 9.33%), this downward trend is replicated in the M-o-M to 0.82% (0.81%: Dec’2019). The highest rise in prices were in Hospital services, Vehicle spare parts, Cleaning, Repair and hire of clothing, Shoes and other footwear, Glassware, tableware and household utensil, Hairdressing saloons and personal grooming establishments, Repair and hire of footwear, Garments and Passenger transport by air.
What Next after the VAT effect in Nigeria?
We are fully aware of the VAT increase from 5% to 7.5% which took effect on the 1st February, 2020. The outcome of this increase is not only felt on the cost of doing business but also on the consumers who are most likely going to experience hikes in the price of goods and services, this is a red flag indicator for inflation as we foresee it rising significantly for the month of February.
CBP Research is of the opinion that the ban of Bikes and Okada riders in Lagos state which held alongside on 1st February, 2020 by Lagos State government would affect Lagos State Headline inflation (rise in the price of goods and services) which stand presently at 1.01% (Dec’19: 0.79%). We see a significant rise in Lagos State inflation in the month of February as a result of this ban.