Culled—Proshare
August 18, 2020
By FBNQuest Research
The headline rate of inflation rose from 12.56% y/y to 12.82% in July according to the NBS report. (Our expectation shared with the newswires was 12.78 %.) Food price inflation picked up from 15.18% y/y to 15.48% while the core measure decreased by 3bps to 10.10% y/y. On a month-on-month basis, headline inflation increased from 1.21% in June to 1.25%.
Although a decrease was recorded, the core inflation rate is still at double-digit levels. The highest increases in core inflation were recorded in pharmaceutical products, hospital services and passenger transportation by road and air among others. The Covid-19/lockdown effect is therefore still visible.
On a y/y basis, imported food price inflation rose to 16.4% y/y from 16.3% recorded in the previous month. The fx supply to NAFEX in the month amounted to US$575m, with non-bank corporates accounting for 72%. The CBN made no injections.
The NBS also tracks headline inflation by state, with the highest, 16.1% y/y, in Bauchi and the lowest, 10.5%, in Kwara. It is worth noting that household baskets vary across states due to different consumption patterns.
Consumer price inflation (% chg y/y)
Sources: National Bureau of Statistics (NBS); FBNQuest Research
Based on the recently released personal statements from the latest monetary policy committee meeting, one of the committee members expressed that inflation risks in the economy are generally stemming from food supply bottlenecks, exchange rate pressure, energy cost and system liquidity. This is in line with our thinking.
Our take is that the headline rate will remain unchanged at 12.8% y/y in August.
