The Nigerian economy grew by 6.28 per cent in the second quarter of this year, driven by non-oil sector growth, while inflation fell for the second straight month in August helped by tight monetary policy, the latest economic data from the National Bureau of Statistics (NBS) have shown.
GDP growth accelerated in the second quarter, up from 6.17 per cent in the first quarter, which was the lowest quarterly rise in three years.
“The non-oil sector was driven by growth in activities recorded in the building and construction sector, while oil sector output decreased, compared to the second quarter of 2011,” the NBS said in its report released Sunday.
The economy is expected to expand at a slower rate this year, after rising 7.4 per cent in 2011, due to disruptions to oil production and economic weakness in developed countries that buy its gasoline-rich crude.
The Consumer Price Index (CPI) dropped to 11.7 per cent year-on-year in August, down from 12.8 per cent in July, largely due to a fall in food inflation which dropped to 9.9 per cent in August from 12.1 per cent the previous month, the NBS said.
Average crude oil output from Africa’s largest producer rose marginally to 2.38 million barrels per day (bpd) in the second quarter, from 2.35 million bpd in the first quarter. This was down from 2.45 million bpd in the second quarter of last year.
Oil accounts for more than 80 per cent of Nigerian government revenue and around 95 per cent of its foreign exchange earnings.
The report said high interest rates and lower food prices had helped temper inflation.
“The relative moderation in the index is attributable to the relative slower rises in both the food and ‘core’ indices partly as a result of aggressive monetary policy initiatives by the Central Bank of Nigeria (CBN), base effects and a much lower rise in several food prices,” the bureau said.
The CBN had, among other things at its last monetary policy committee (MPC) meeting, raised banks’ cash reserve ratio (CRR) to 12 per cent from 8 per cent in a bid to curb inflation and discourage speculative activities at the foreign exchange market.
The CBN monetary policy committee will meet next week and while the inflation numbers will feed some private sector demand for a loosening of monetary policy, some analysts are expecting rates to remain at 12 per cent, as they have been since November last year. The rate decision will be announced tomorrow.
Other reasons given for the 8.5 per cent drop in inflation include base effects and a much lower rise in several food prices such as yam, tubers and vegetables due to the harvest season.
The NBS said: “In particular, the Food Index exhibited a sharp increase in August 2011. The implication is that year-on-year changes in August this year were muted due to higher prices in August of the previous year.
“In August this year, most classes under the food index increased, but again, only in relative moderation.”
According to the report, the composite Food Index dropped year-on-year by 9.9 per cent to 135.9 points in August from 12.1 per cent in July.
Meanwhile, the urban inflation rate stood at 14.4 per cent year-on-year, while that of the rural component recorded a year-on-year increase of 9.7 per cent.
According to the NBS, the urban all items index increased by 0.69 per cent month-on-month, while the corresponding rural index also increased by 0.66 per cent, compared with the previous month.
The NBS report noted that on a month-on-month basis, core index increased by 0.6 per cent during the same period.
“The rise in core index is attributable to higher prices of clothing, medical services, hotel and restaurant prices, and accommodation services, among others. The average 12-month annual rate of rise of index was 13.3 per cent for the twelve-month period ending August 2012,” it stated.
Continuing, the report also noted that percentage change in the average composite CPI for the 12-month period ending in August 2012 over the average of the CPI for the previous twelve-month period was 11.8 per cent.
It added that the corresponding 12-month year-on-year average percentage change for urban and rural indices was 12.4 and 11.4 respectively.