December 17, 2021/InvestmentOne Report

Please click to download our November 2021 Inflation Update

• Recently released report by the National Bureau of Statistics, showed that headline inflation continued its decelerating trend in the month of November 2021. Headline inflation figure for the month rose by 15.40% (year-on-year), 0.59% lesser than the 15.99% (year-on-year) figure recorded in October 2021 but 0.51% higher than the rate recorded in November 2020 (14.89%).
• The food sub-index increased by 17.21% y/y in November 2021 from 18.34% y/y printed in October. Conversely, the sub-index accelerated on a m/m basis as it grew by 1.07% in the month, up by 0.16% from the previous month.
• The core inflation sub-index, which excludes the prices of volatile agricultural produce, rose by 13.85% year-on-year in November 2021 from 13.24% in October 2021. Similarly, on a month-on-month basis, the index inched up to 1.26% in the month, a 0.46% increase relative to the recorded figure in prior month.
• Going forward, we expect inflation to maintain its deceleration majorly on the back of high base effect. We posit that the increase in food supply attributable to the harvest season should reduce the pressure on the Food index. However, yuletide season demand may exert upward pressure on the month-on-month Consumer Price Index (CPI).