February 16, 2021/Cordros Report

Nigeria’s headline inflation maintained its upward trajectory for the 17th consecutive month, as it rose by 71bps in January 2021 to 16.47% y/y (December 2020: 15.75% y/y), the highest level since April 2017 (17.24% y/y). The outturn is 37bps higher than Cordros’ (16.10% y/y) estimate, with the largest variance coming from the core index. On a month-on-month basis, headline inflation declined by 12bps to 1.49%.

Food inflation rose by 101bps to 20.57% y/y in January 2021, the highest level since the NBS started keeping the current series of data. Notably, the highest price increases were recorded in Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, Vegetable, Fish and Oils and Fats. On a month-on-month basis, food inflation rose by 1.83% (December 2020: 2.05%). We believe the m/m moderation in food prices is largely due to the dissipating impact of festive induced demand that stoked pressures on food items in the prior month.

Elsewhere, core inflation was up by 48bps to 11.85% y/y. Pressures were most significant in the prices of Passenger transport by air, Medical services, Hospital services, Passenger transport by road, Pharmaceutical products, Paramedical services, Repair of furniture, Vehicle spare parts, Motor cars, Miscellaneous services relating to the dwelling, Maintenance and repair of personal transport equipment. Similarly, on a month-on-month basis, the core index increased by 16bps to 1.26% (December 2020: 1.10%).