August 17, 2020/Cordros Report

Nigeria’s headline inflation maintained its upward trend, as it expanded by 26bps in July 2020 to 12.82% y/y (June: 12.56% y/y), the highest since level since March 2018. Relative to Cordros’ estimate (12.74%), the outturn is 8bps higher due to a negative surprise from food inflation. From a month ago, headline inflation increased by 4bps to 1.25%, the slowest pace of price growth since March 2020.

Food inflation rose by 30bps to 15.48% y/y in the period under review. We believe the seasonality effect typically associated with the onset of the planting season, as well as flooding in some parts of the country must have negatively influenced the food basket. Specifically, the rise in the food index was caused by increases in prices of Bread and Cereals, Potatoes, Yam and other tubers, Meat, Fruits, Oils and fats, and Fruits. Compared to June 2020, food inflation expanded by 4bps, to 1.52% m/m.

Elsewhere, core inflation was down by 3bps to 10.10% y/y. Pressures were most significant in the prices of Medical services, Passenger transport by road, Maintenance and repair of personal transport equipment, Paramedical services and Vehicle spare parts. On a month-on-month basis, the core index was down by 11bps to 0.75%.