Dodgy approximation by the NBS in December

The National Bureau of Statistics (NBS) released inflation for December which stated that inflation rose 0.1percentage points to 8% on an annualized basis. The NBS report is slightly misleading as while its approximately 8%, the agency is exposing a bias. The actual percentage change in the CPI (Consumer Price Index) over December is 7.945% which compares to 7.942% in November using NBS own numbers. So it appears the agency was trying to create an impression that inflation ticked higher when in actuality its really flat from the previous reading. This is not the first time ironically in 2013 over the same period, computing the percentage change in the CPI using NBS numbers for November and December yields 7.93% and 7.94% respectively. Curiously the agency rounded up the December figure to 8% as they have done this year. Someone trying to close the year at a specific number?

In any case, the latest number brings 2014 average inflation 0.43 percentage points lower than 2013 at 8.06%. The lower inflation number over 2014 is interesting and comes despite a lot of commentary about the impact of Boko Haram on agricultural production implying that food production from other regions more than compensated for the slack in the north. To set things in context, 2013’s single digit reading owed much to strong base effects from the 2012 partial fuel subsidy removal.

Not that the 2014 readings could be in doubt food production has improved given the declines in national food import bill and single digit readings have now existed for 24 months so quite frankly all is well.

Going forward, the only way would seem to be up for inflation and thanks to the November devaluation of the naira, I think we could see things track higher over 2015. Chip in political spending and further exchange rate weakness and the single digit run could be over by next year.

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