The National Bureau of Statistics (NBS) today reported Nigeria’s July headline inflation at 12.8% year-on-year (y-o-y), down by 10bps from 12.9% recorded in June 2012. In contrast, food inflation rose by 10bps to 12.1% from 12.0%. Core inflation (measured by All Items Less Farm Produce (Index) however dropped to 15.0% y-o-y from the 15.2% recorded in June 2012.
• On a month-on-month basis, inflation increased marginally by 0.2%, occasioned by the increase in certain food items such as Oil and fats, Bread, Fruits etc as demand pressure outweighed supply during the Ramadan period.
The 20% and 100% import duties imposed on wheat and flour, brought about the rise in their prices which also contributed to the increase in food inflation in July. Core inflation also increased slightly by 0.1%, occasioned by higher prices of gas and other household repairs.
• We expect core inflation to ease slightly in August on a month-on-month basis, due to the relative strengthening of the Naira (trading at an average of N159.55/US$1.00 in August compared to an average of N161.34/US$1.00 in July ) during the period.
The CBN’s recent liquidity tightening measures have also seen the cost of short term domestic funding escalate, which we believe will result in a downward pressure on headline inflation. We thus expect a minor decline in August
inflation figures next month.
Source: Afrinvest
