Mix flour, yeast, nutmeg, sugar, salt, and chilli powder in a bowl.
Add water gradually and beat vigorously until a dough has a sticky consistency, continue beating for a short while longer till it becomes very elastic. This is important to work up the gluten in the flour for the right texture. You can use the dough hook of an electric mixer.
Cover with plastic wrap or a tea towel and put in a warm place away from draught, till dough doubles in size, about 45 minutes.
Put oil in a deep-frying pan over medium heat. When the oil is hot enough, about 180°C, lightly oil hand and scoop 1 to 2 tablespoons balls into the oil or use an ice-cream scoop.
Fry until golden brown all over. Drain on paper towels and sprinkle with sugar.
Store fried puff-puff in a plastic bag, well wrapped in the freezer and warm in the microwave oven for 30 seconds on high from frozen.