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Nigeria: Broad Money Grows 6.51% in December 2016

By Modupe Gbadeyanka

Central Bank of Nigeria (CBN) Depository Corporations Survey has shown that broad money supply (M2) expanded month-on-month by 6.51 percent in December 2016 to N23.84 trillion, a report by Cowry Asset has revealed.

It was gathered that the increase in M2 followeda0.70 percentincreaseinNet Domestic AssetstoN14.38trillion, accompanied by a 16.98 percent decrease in Net Foreign Assets to N9.35trillion.

The increase in net foreign assets partly reflected recovery in international crude oil prices since October last year juxtaposed with improved crude oil production.

Narrow money supply, M1, increased by 10.46 percent to N11.52 trillion as demand deposits grew by 9.69 percent to N9.70 billion and currency outside the banks increased by 14.70 percent to N1.82 trillion.

Also, net domestic credit upped by 0.45 percent to N26.97 trillion as credit to the private sector declined by 2.91 percent to N22.37 trillion while credit to the government increased by 20.85 percent to N4.60 trillion; which was indicative of crowding out of the private sector in a high interest rate environment.

In the real sector, Nigeria’s economy recorded sustained increase in annual inflation rate, to 18.72 percent in January 2017 (from 18.55 percent in December 2016).

However, monthly increase in composite consumer price index slowed to 1.01 percent in the review month (from 1.06 percent in December).

Increase in general price level was partly due to increased pressure from higher foreign exchange rates and their subsequent impact on consumer goods and services –Naira/USD exchange rates increased month-on-month by 1.78 percent and 1.63 percent to average N490/USD and N495.38/USD at the Bureau De Change and Parallel market segments respectively.

Similarly, the prices of refined petroleum products increased on a monthly basis–Premium Motor Spirit increased by 1.36 percent to average N148.7/litre; Automotive Gas Oil increased by 22.59 percent to average N240.52/litre; Household Kerosene spiked by 87.12 percent to average N433.84/litre; while average price for Liquefied Petroleum Gas increased by 22.91 percent to N5,500 per 12.50kg refill.

Food inflation rate rose to 17.82 percent in January (faster than 17.39 percent in December), driven by increases in prices of bread and cereals, meat oil and fats, and fish.

However, core inflation rate fell to 17.90 percent in January (from 18.10 percent in December).

The price index of housing water, electricity, gas and other fuel grew by 27.17 percent in January (slower than 27.25 percent in December); imported food index rose by 20.97 percent in January (slower than 21.08 percent in December); while transportation index increased at a faster pace by 17.22 percent in January (from 17.30 percent in December).

The clothing and footwear price index also increased at a faster pace by 17.85 percent in January (from 17.81 percent in December).

On the foreign scene, inflation rate in the United States increased year-on-year to 2.5 percent in January 2017 (higher than 2.1 percent recorded in December; above market expectations of 2.4 percent and higher than 2.0 percent target set by the Federal Open Markets Committee), mainly driven by gasoline prices.

In the same vein, inflation rate in the United Kingdom increased to 1.8 percent in January 2017 (higher than 1.6 percent in December, but below mark expectations of 1.9 percent), mainly driven by rising cost of fuel.

Consumer prices in China also increased year-on-year by 2.5 percent in January 2017 (higher than 2.1 percent recorded in December), driven by a faster increase in cost of food and non-food items.

The annual inflation rate in Ghana slowed to 13.3 percent in January (from 15.4 percent in the previous month), driven by slower increase in prices of food and non-food items (7 percent from 9.7 percent and 16.6 percent from 18.2 percent respectively).

View full report here: Cowry Asset

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Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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