Fuel crisis, other factors push inflation sharply to 9% in May

13 June 2015, Abuja – The Consumer Price Index (CPI) which measures inflation rose to 9 per cent in May compared to 8.7 per cent in the previous month, according to the National Bureau of Statistics (NBS).


Fuel scarcity persists nationwide.

Fuel scarcity persists nationwide.

This is coming on the heels of the disbursement of N6.9 billion to seven power firms by the Central Bank of Nigeria (CBN)  in a sustained effort to improve on electricity generation in the country.
The NBS said food prices edged higher in May “as a result of the late onset of rains which have pushed back the harvest season coupled with higher transportation costs due to limited Premium Motor Spirit (PMS) availability.”
According to the latest CPI figures released yesterday, the food sub-index rose by 9.8 percent (year-on-year) in May, up by 0.3 percentage points from 9.5 percent in April.
“All groups which contribute to the Food sub-index increased at a faster pace during the reporting period with the highest year-on-year rises recorded in the Fish, Potatoes, yams and Tubers and Meats groups,” it stated.
According to the NBS: “On a month-on-month basis, the Headline index increased by 1.1 percent in May; the largest month-on- month increase recorded since June 2012 as a result of increased PMS prices and the resulting knock-on effects on the prices of other consumer items. Prices increased at a faster pace across all COICOP divisions that contribute to the index.”
Both the Urban and Rural Price Indices increased at a faster pace relative to April.
Urban inflation increased by 9.1 per cent, from 8.7 per cent in April, while the Rural index increased by 8.9 per cent, 0.3 per centage points higher than 8.6 per cent in April.
On a month-on- month basis, both the Urban and Rural indices increased by 1.1 per cent from 0.8 and 0.7 per cent respectively recoded in April, the NBS stated.
The Core Sub-index, which excludes the prices of volatile agricultural produce increased at a faster pace for the fifth consecutive month as prices rose by 8.3 per cent (year-on-year) in May, up by 0.6 per centage points from 7.7 per cent in April with the strongest increases recorded by housing, water, electricity and gas. Others are fuels, alcoholic beverage, tobacco and kola.
It said: “On a month-on-month basis, the Core Sub-index increased by 1.2 per cent, increasing at the fastest pace observed since August 2013. This was 0.6 per centage points higher from 0.6 per cent recorded in April.
“The largest increases were recorded in the liquid fuels (Kerosene), repair of household appliances and furniture, fuels and lubricants for personal transport equipment (Premium Motor Spirit), and household textiles groups amongst others.
The average 12 month annual rate of rise of the index was recorded at 7.0 per cent for the twelve-month period ending in May 2015, marginally higher from the 12 month rate recorded in April (6.9 per cent).”
CBN Moves to Improve Electricity, Disburses N6.9bn to 7 Power Firms …
The Central Bank of Nigeria (CBN) on Friday disbursed a total sum of N6.9 billion to seven power firms in a sustained effort to improve on generation in the country.
The latest credit to five gas suppliers, one power generation company and one power distribution company is part of the apex bank’s current financial intervention to the sector.
Speaking at the disbursement ceremony in Abuja, CBN Governor, Mr. Godwin Emefiele said the intervention which would go a long way to boost gas supply to power firms represented debts by the power sector in proportion to the obligations to repay the facility by the five distribution companies which signed up for the facility.
He said: “I trust that you will see this as a clear sign of the government’s commitment to change the course of both the domestic gas sector and power sector. By addressing the build-up of debts along the power value chain, this facility will go a long way in boosting gas supply to the power sector and stabilising the electricity market. This is vital to bringing about more stable and affordable electricity supply to our homes and businesses.”
Emefiele added that the CBN support had become inevitable given that about 70 per cent of power plants in the country are fueled by gas.
However, he said the CBN found that due to the absence of formal binding agreements between gas suppliers and power plants, the plants had significantly piled up debts to gas suppliers, a situation which has resulted into the current difficult in electricity generation using gas.
He said such debts had peaked to about N40 billion as at the end of 2014.
A rundown of the distribution showed Chevron Nigeria Ltd with the highest amount of N2.04 billion while Shell Petroleum Development Company received N965 million.
Others include Pan Ocean Ltd which received N230 million; Niger Delta Western N852 million; Seplat N739 million and the Nigerian Petroleum Development Company which got N407 million.
In addition, Ibom Power Generation Company got N1.7 billion as well as Eko Distribution Company which also received N4.4 million.
Meanwhile, the Commissioner, Market Competition and Rate, Nigeria Electricity Regulatory Commission (NERC), Mr. Patrick Umeh appealed to stakeholders to ensure that gas is produced for domestic consumption in the power sector.
He also praised the CBN for the initiative adding that with the disbursement, the knotty issues around legacy debts in the power sector had been addressed


– This Day

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