By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-Nigeria’s headline inflation rate declined 8.3 percent Year-on-Year (YoY) in September indicating a 20 basis point (BPS) 0.2 percent drop compared with 8.5 percent recorded in August, according to the latest consumer price index (CPI) report by the National Bureau of Statistics (NBS).
NBS say this mark the first month of a Y-o-Y contraction in consumer price index (CPI) since February, after six consecutive month of Y-o-Y increase in the CPI, and the current print is the equivalent to the figure for July 2014.
According to NBS, pushing the Y-o-Y headline figure lower was the reduction in the rate at which food prices were rising, and also the easing of prices in key divisions such as housing, water, electricity and other fuels.
Cordros Capital analysis say on a month on month basis, the headline index stood at 0.55 percent in September, up 7bps from 0.48 percent in August.
“The reduction in the rate of increase was as a result of slower increases in all groups that make up the index. Month-on-month, food prices rose by 0.60 percent, unchanged from the figure recorded in August, as the highest price increases were recorded in the Potatoes, Yam & Other Tubers, Bread and cereals, Meat and Fruit groups. “The easing could be as a result of the system benefiting from an increase farm output following the harvest season.
NBS further affirmed that core inflation remains stable for the second month, it said the core sub-index (prices of All Items less Farm Produce) rose by 6.3 percent in the review month, unchanged from the value recorded in august, hence maintaining its lowest level since June 2013.
Cordros analyst says, the core index grew faster on a month-on-month basis, rising by 0.60 percent in September, 20bps point higher than the value recorded in August. “The highest price increases were recorded in the Books and Stationary category due to the commencement of the academic year. Higher rate of increases were also recorded in the appliances, articles and products for personal care, non-durable household goods, and furniture and furnishings groups,” the report affirmed.
The analyst at Cordros Capital said single-digit inflation is still achievable.
It reported that the figure for the headline inflation implies that the central bank of Nigeria’s (CBN’s) inflation target of nine (9) percent for 2014 is still intact.
“As such, we do not anticipate any significant shift in average inflation levels provided that seasonal increase in the supply of food items is sustained. However, the trend in the general price levels will be influenced by government spending ahead of the 2015 general elections,” Cordros said.
Cordros said as observed in its previous reading, the persistent downtrend in global crude oil prices (occasioned by falling demand) as well as the anticipated foreign flow reversals, together with its attendant impact on the Naira will continue to stoke up inflationary pressure.
The Cordros analyst say the Monetary Policy Committee (MPC) is expected to hold its last meeting of 2014 on November 24 and 25. Thus, the MPC must contend with the management of domestic liquidity and inflation expectations,” the report affirmed.
