Nigeria: Inflation Attitude Survey Report for the First Quarter of 2018

Transcription

1. Central Bank of Nigeria Inflation Attitudes Survey Report Q1 2018 Statistics Department April 2018 1
2. Table of Contents 1 .0 Highlights 3 2.0 Introduction 3 3.0 About the Survey 3 4.0 Inflation 3 5.0 Interest Rates 4 6.0 Interest Rate-Inflation Nexus 5 7.0 Opinions on the Central Bank of Nigeria 6 Charts Figure 1: Households’ perception/expectations of price changes in the past one year/next one year 4 Figure 2: Households’ perception/expectations of interest rate changes in the Past one year/next one year 4 Figure 3: Households’ opinions on the impact of interest rate changes on households and on the Nigerian economy 5 Figure 4: Households’ perception of the impact of interest rate changes on prices in the Short and medium term 5 Figure 5: Household choice between interest rate and inflation 6 Figure 6: Households assessment of CBN’s role in controlling inflation 6 Tables Table 1: Inflations Attitudes Survey data 7 2
3. A Quarterly Publication of the Central Bank of Nigeria 1 .0 1st Quarter, 2018 Highlights The highlights of the Q1 2018 IAS are as follows: 2.0  Respondents believe that the economy would end up weaker if prices start to rise faster than they do now.  Given a trade-off between inflation and interest rates, more respondents prefer interest rates to fall, while inflation rate rises.  Majority of the respondents are of the view that it would be best for the Nigerian economy if interest rates went down.  Majority of the respondents are aware that the CBN influences the direction of interest rates to control inflation. Introduction The Central Bank of Nigeria (CBN), aside from its price and monetary stability mandate, is also tasked with supporting the Government’s policies on economic growth and unemployment reduction. One of the objectives of the Bank is to build public confidence and support for sustainable economic development and public understanding of the Monetary Policy Committee’s roles. This is because the understanding and support by the public towards attaining the objectives of price stability would provide an environment conducive for achieving macro-economic stability. The Statistics Department, on a quarterly basis since June 2009, conducts the inflation attitudes survey to sample the views of households on how they view the price changes of goods and services in the last twelve months, and their expectations of price changes over the next twelve months. Respondents’ opinions were used to explore the general public’s understanding of monetary policy framework. This is because inflation expectations and public understanding of what influences them are important parameters for successful monetary policy formulation. Good estimates of inflation expectations and the level of public understanding of the underlying factors would assist the Bank to assess the impact of its efforts in maintaining price stability in the Nigerian economy. 3.0 About the Survey The Q1 2018 Inflation Attitudes Survey was conducted from March 19 - 24, 2018 from a sample size of 2070 Household randomly selected from 207 Enumeration Areas (EAs) across the country, with a response rate of 83.5 percent. 4.0 Inflation Respondents were asked what would become of the Nigerian economy if prices started to rise faster than they do now. The survey result showed that 54.7 per cent of the respondents believed that the economy would end up weaker, 11.6 per cent stated that it would be stronger, 16.2 per cent of the respondents believed it would make a little difference, while 3
4. 17 .2 per cent did not know. The responses suggest considerable support for price stability, as majority (54.7 per cent) agreed that the economy will end up weaker. This is consistent with the notion that inflation is constrains economic growth. When asked how prices have changed over the past 12 months, respondents gave a median answer of 4.7 per cent. Of the total respondents, 16.2 per cent thought prices had gone down or not changed, 61.2 per cent felt that prices had risen least 3.0 per cent, while 16.9 per cent felt that prices inched up by more than 1.0 per cent, but less than 3.0 per cent. Those that had no idea were 5.8 per cent. The median expectation of price changes over the next 12 months was that prices would inch up by 2.3 per cent. From the total responses, 41.1 per cent of the respondents expected prices to rise by at least 3 per cent over the next 12 months, 14.2 per cent expected prices to increase by more than 1 per cent, but less than 3 per cent. Similarly, 36.9 per cent of the respondents were optimistic that prices over the next 12 months would either go down or remain the same. (Fig. 1, Table 1). 5.0 Interest Rates The percentage of respondent households who felt that interest rates had risen in the last 12 months fell by 14.7 points to 31.6 points in the current quarter when compared to 56.3 points attained in Q4, 2017. On the other hand, 8.8 per cent of respondents believed that interest rates had fallen, 15.3 per cent of the respondents were of the opinion that the rates stayed about the same in the last 12 months, while 44.3 per cent of the households had no idea. The result revealed that more households perceived that interest on bank loans and savings rose over the past 12 months. On the expected change in interest rates on bank loans and savings over the next 12 months, more respondents (26.9 per cent) were of the view that the rates will rise, while 17.5 per cent believed that the rates will fall. A net rise value of 9.4 per cent was recorded compared to 6.5 per cent attained in the previous quarter. About 59.6 percent of the respondents either expected no change or had no idea. 4 60.0 Public Perception Interest Index Public Expectation Interest Index 50.0 50.0 40.0 40.0 30.0 30.0 20.0 20.0 10.0 10.0 0.0 0.0 Q1 2018 Q3 2017 Q1 2017 Q3 2016 Q1 2016 Q3 2015 Q1 2015 Q3 2014 Q1 2014 Q3 2013 Q1 2013 Q3 2012 -10.0 Q1 2012 -10.0 Diffusion Index 60.0 Diffusion Index Similarly, the respondents were asked whether it would be best for the Nigerian economy for interest rates to rise or fall. The results showed that 41.5 per cent indicated that it would be best for the Nigerian economy if interest rates fell, while 13.3 per cent opted for higher interest rates. The results further revealed that 8.5 per cent thought that it would make no difference, while 36.4 had no idea (Table1). These responses revealed that most of the respondents favored lower interest rates for the Nigerian economy. (Fig 2). Fig. 2: Households perception/ expectations of interest rate changes in the past one year/ next one year
5. 50 .0 45 45.0 40 40.0 35 35.0 30 30.0 25 25.0 20 20.0 15 15.0 10.0 5.0 0.0 Q1 2018 Q3 2017 Q1 2017 Q3 2016 Q1 2016 Q1 2014 Q3 2013 Q1 2013 Q3 2012 0 Q3 2015 5 Q1 2015 10 Q3 2014 Short Term Interest Rate - Price Nexus Medium term Interest Rate - Price Nexus Diffusion Index 50 Q1 2012 Responses on what the impact a rise in interest rates in the short and medium terms would have on prices: 40.2 per cent agreed that a rise in interest rates would make prices in the street rise slowly in the short term, as against 12.3 per cent that disagreed. While in the medium term, 39.2 per cent agreed that a rise in interest rates would make prices in the street rise slowly, 14.0 per cent disagreed (Fig. 3). Diffusion Index 6.0 Interest Rate-Inflation Nexus Fig. 3: Households perception of the impact of interest rate rise on prices in short and medium term 60.0 Interest rates to rise Q1 2018 0.0 Q3 2017 0 Q1 2017 10.0 Q3 2016 10 Q1 2016 20.0 Q3 2015 20 Q1 2015 30.0 Q3 2014 30 Q1 2014 40.0 Q3 2013 40 Q1 2013 50.0 Q3 2012 50 Diffusion Index Interest rate to fall Q1 2012 These responses suggest that given a trade-off, majority of the people would prefer higher interest rates to higher inflation which is suggestive of the respondent households’ support for the Bank’s price stability objective (Fig. 4). 60 Diffusion Index Respondents were asked to choose between raising interest rates in order to keep inflation down, and keeping interest rates down to allow prices to rise. Responding, 27.2 per cent preferred interest rates to rise in order to keep inflation down compared to 31.6 per cent who said they would prefer prices to rise faster, while 40.9 per cent had no idea. Fig. 4: Households choice between interest rate and inflation 7.0 Opinions on the Central Bank of Nigeria To assess whether people are aware of the way monetary policy works in Nigeria, respondents were asked if they knew which group of people meet to set Nigeria’s monetary policy rate. Responding, 24.7 per cent felt it was the Monetary Policy Committee, 10.7 per cent felt it was the Federal Ministry of Finance, 16.5 per cent believed it was the Government, 4.0 per cent felt it was the National Assembly, while 2.2 and 41.9 per cent answered ‘others’ and ‘do not know’, respectively. When asked to identify which group mostly influences the direction of interest rates, the result indicated that majority of the respondents (38.2 per cent) were aware that the Central Bank of Nigeria influences the direction of interest rates. About 9.3 per cent stated that it was the Government ministers, 5.2 and 9.8 per cent were of the opinion that civil servants and Banks influence the rates, respectively, while 37.3 per cent had no idea. On what best describes the Monetary Policy Committee, 18.8 per cent felt it was influence by the Government, 13.7 per cent felt it was the federal ministry of finance, and 5.4 per cent believed that it was the national assembly, while 14.2 per cent thought it was not influence by any arm of government and 47.7 percent had no idea. 5
6. 6 No idea Q1 2018 Q4 2017 Very dissatisfied Customer Satisfaction Index Respondents were asked if they were satisfied /dissatisfied with the CBN’s management of interest rates in Nigeria. The net satisfaction index, which is the proportion satisfied less the proportion dissatisfied, was 6.3 per cent compared with 18.6 per cent recorded in Q4, 2017. Among the satisfied group, 6.0 per cent were ‘very satisfied’ while 22.8 were ‘fairly satisfied’. However, 12.8 per cent were ‘neither satisfied nor dissatisfied’, whereas 14.4 per cent were ‘very dissatisfied’. Those who had no idea accounted for 35.8 per cent of the respondents (Fig. 6). Fairly dissatisfied Neither satisfied nor dissatisfied Fairly satisfied Very satisfied 0 10 20 30 Percent Fig. 5: Households assessment of CBN on its role in controlling inflation 40
7. ANNEX : TABLES TABLE 1 INFLATION ATTITUDES SURVEY DATA Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 10.8 15.3 17.9 45.2 10.8 3.1 8.6 6.7 15.5 62.6 6.6 5.1 8.7 7.5 16.9 61.2 5.8 4.7 35.4 8.5 13.6 33.0 9.5 1.2 29.1 7.8 14.2 41.1 7.8 2.3 Q.1 Generally, prices of items that were sold N1,000 a year ago now sells for? Less than N1000 N1000 N1010 to N1030 Above N1030 No idea Median (%) 2.3 6.9 11.1 62.1 17.6 6.8 7.6 14.4 13.9 52.1 11.8 4.2 Q. 2 How much will you expect prices of items that are currently sold for N1,000 to change in the next 12 months? Less than N1000 21.23 30.2 27.8 N1000 12.1 15.9 18.8 N1010 to N1030 16.6 17.7 19.1 Above N1030 30.6 21.6 20.0 No idea 19.5 14.7 14.3 Median (%) 1.8 0.6 0.6 Q. 3 If prices started to rise faster than they do now, do you think Nigeria's economy would…? End up stronger Make no difference Be weak Don't know 13.5 18.61 50.4 17.4 13.4 20.3 50.0 16.3 12.1 23.7 47.0 17.1 11.3 21.4 57.2 10.1 11.6 16.2 54.7 17.2 38.9 18.3 19.4 23.3 35.9 18.3 20.0 25.6 42.6 18.2 20.5 18.6 30.8 17.2 14.9 37.0 Q. 4 What do you think of this year's Government anticipated inflation rate? Too high Too low About right No idea 39.9 17.2 20.9 22.0 Q. 5 How has interest on bank loans changed over the last 12 months? Risen significantly Risen marginally No change Fallen marginally Fallen significantly No idea 30.03 24.58 16.04 8.2 4.78 16.4 30.9 22.8 16.6 7.1 4.1 18.6 28.4 22.0 19.2 8.5 4.3 17.5 28.9 27.4 15.4 4.7 3.4 20.2 14.8 16.8 15.3 4.5 4.3 44.3 Total saying 'rise' Total saying 'fall' Net rise 54.6 13.0 41.7 53.7 11.2 42.5 50.4 12.8 37.6 56.3 8.1 48.2 31.6 8.8 22.8 Q. 6 How would you expect interest rates to change over the next 12 months? Risen significantly Risen marginally No change Fallen marginally Fallen significantly No idea 16.4 21.85 17.38 18.71 10.5 15.06 14.0 21.9 17 20.5 11.7 15 14.4 20.2 17.7 20.4 12.8 14.4 15.2 21.7 15.8 17.7 12.7 16.8 12.2 14.7 13.2 10.9 6.6 42.4 Total saying 'rise' Total saying 'fall' Net rise 38.3 29.3 9.0 35.9 32.2 3.7 34.6 33.2 1.4 36.9 30.4 6.5 26.9 17.5 9.4 19.6 54.3 11.7 14.0 13.3 41.5 8.5 36.4 Q. 7 What do you think would be best for the NIgerian economy - for lending interest rates to? Go up Go down Remain unchanged No idea 19.1 40.3 23.2 17.3 7 16.2 45.2 21.4 17.1 16.4 45.1 23.3 15.1
8. TABLE 1 (CONT'D) INFLATION ATTITUDES SURVEY DATA Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q.8 Do you agree with the following statements? A rise in interest rates would make prices in the street rise slowly in the short term - say a month or two, Agree strongly Agree Neither agree nor disagree Disagree Disagree strongly Don't know 22.1 29.8 18.6 13.8 4.0 11.7 23.0 32.5 18.4 10.7 4.2 11.3 22.1 30.9 20.0 12.8 3.8 10.4 21.8 34.4 15.3 11.9 5.3 11.3 13.1 27.1 12.6 9.2 3.2 34.9 Total agree Total disagree Net agree 51.9 17.8 34.0 55.5 14.9 40.6 53.0 16.6 36.4 56.2 17.2 39.0 40.2 12.4 27.8 17.7 35 17.5 13.5 4.7 11.7 10.9 28.3 12.5 10.3 3.71 34.3 46.7 51.3 47.9 52.7 Total agree Total disagree 20.9 18.2 18.6 18.2 Net agree 25.9 33.1 29.3 34.5 Q. 9 If a choice had to be made, either to raise interest rates to try to keep inflation down; or keep interest rates down and allow inflation to rise, which would you prefer ? Interest rate to rise 44.7 42.2 44.2 38.6 Interest rate to fall 18.6 17.7 21.7 36.5 No idea 36.5 39.8 33.9 24.7 39.2 b) A rise in interest rates would make prices in the street rise slowly in the medium term - say a year or two Agree strongly Agree Neither agree nor disagree Disagree Disagree strongly Don't know 17.7 29.0 18.4 14.8 6.07 14.0 18.4 32.9 16.5 13.0 5.2 13.9 17.3 30.6 20.9 12.5 6.1 12.5 14.0 25.2 27.2 31.6 40.9 Q. 10 Which group of people meets to set the Monetary Policy Rate? Monetary Policy Committee The Government Federal Ministry of Finance National Assembly Others Don't know 52.7 10.1 15.6 5.9 2.8 13.0 54.5 11.2 13.1 5.0 1.8 14.4 55.4 10.3 15.3 4.6 1.8 12.6 55.1 14.3 14.4 3.9 2.1 10.3 24.7 16.5 10.7 4.0 2.2 41.9 7.8 6.6 73.2 4.0 8.3 6.5 5.1 70.0 10.8 7.6 9.3 5.2 38.2 9.8 37.3 Q. 11 Which of these groups do you think influences the direction of the interest rates? Government ministers Civil servants CBN Banks No idea 6.4 7.2 73.8 3.2 9.4 8.7 5.6 72.1 3.7 9.9 Q. 12 Which of the followings best describes the independence of the Monetary Policy Committee? Influenced by the Government Influenced by the federal ministry of finance Influenced by National Assembly Not influenced by any arm of Government No idea 20.6 29.5 26.2 8.7 15.0 22.1 30.7 26.4 7.0 13.7 23.6 29.6 26.3 8.6 11.7 27.4 24.4 8.5 23.4 16.2 18.8 13.7 5.4 14.2 47.7 Q. 13 How satisfied are you with the management of interest rate in Nigeria? Very satisfied Fairly satisfied Neither satisfied nor dissatisfied Fairly dissatisfied Very dissatisfied No idea 18.6 30.1 17.9 0.0 15.9 11.4 23.3 40.9 14.4 0.0 10.3 11.1 25.6 35.7 19.6 0.0 10.4 8.6 10.1 35.6 18.5 11.4 15.7 8.7 6.0 22.8 12.8 8.1 14.4 35.8 Total satisfied Total dissatisfied Net satisfied 48.7 15.9 32.7 64.2 10.3 53.9 61.3 10.4 50.9 45.7 27.1 18.6 28.8 22.5 6.3 8