In spite of the fact that inflation rate in Nigeria hit 14.89% in November from 14.23% previously in October, the country still remains Africa’s most largest economy, and the 26th largest economy globally.
With an average GDP of $442.976 billion, International Monetary Fund (IMF) says Nigeria under President Muhammadu Buhari’s watch is maintaining its lead as the biggest economy in Africa in 2020. The Fund’s latest data is however, ranking the country as the 26th largest economy globally.
IMF says its computation is based on nominal GDP, which does not take into account differences in the cost of living in different countries.
It also mentions that the country’s economic outlook is challenging and that the economy is ‘’buffeted from side to side by a cocktail of issues, including the uncertainty over the COVID-19 pandemic, low oil prices, capital outflows and balance of payment challenges.”
Additionally, IMF states: “The COVID-19 global pandemic is exacting a heavy toll on the Nigerian economy, which was already experiencing falling per capita income and double-digit inflation, with limited buffers and structural bottlenecks.
“Low oil prices and sharp capital outflows have significantly increased balance of payments (BOP) pressures and, together with the pandemic-related lockdown, have led to a large output contraction and increased unemployment.”
Nigeria’s GDP is projected to contract by 3¼ per cent in 2020 due to a number of factors – including the ongoing COVID-19 pandemic – but the recovery is projected to start in 2021, with subdued growth of 1½ per cent and output recovering to its pre-pandemic level only in 2022.
However, last November’s inflation rate represents the highest recorded since January 2018, when the rate stood at 15.13%.
A report by the National Bureau of Statistics showed that higher food prices contributed to the spike as the food index rose sharply by 18.3% in November 2020 compared to 17.38% in October 2020.
Prices of Bread and cereals, Potatoes, yam and other tubers, meat, fish, fruits, vegetables, and oils and fats grew at a faster pace of 0.08% points from 1.96% recorded in October 2020.
Core inflation, which excludes volatile components like food and fuel, stood at 11.05% in November 2020, declining by 0.09% when compared with 11.14% recorded in October; suggesting a lack of demand and weak economic activity.
“On a month-on-month basis, the core sub-index increased by 0.71 per cent in November 2020, representing a sharp 0.54% point decline when compared with 1.25% recorded in October 2020.”
“The highest increases were recorded in prices of Passenger transport by air, medical services, hospital services, repair of furniture, passenger transport by road, maintenance and repair of personal transport equipment, vehicle spare parts, hairdressing salons and personal grooming establishments, pharmaceutical products, paramedical services and motor cars”, the national data agency noted.
November, according to financial analysts, was the first month in which the impact of the increase in the price of petrol and a partial rise in electricity tariffs fed into the inflation basket.