July 15, 2022/Coronation Research

The NBS has released its June inflation report to show –

Headline rate 18.60% y/y (17.71% in May);
Core rate 15.75% y/y (14.90%); and
Food rate 20.60% y/y (19.50%).       

• June’s headline reading increased by 88bps (when compared with the previous month) to 18.60% y/y.     
• On a month-on-month basis, headline inflation increased from 1.78% recorded in May to 1.82% in June ’22.
• Food inflation recorded an increase of 110bps when compared with the previous month. For the food inflation rate (20.6%), the highest increases were recorded in bread, cereals, fish, meat, wine, potatoes, yam, and other tubers.
• On a y/y basis, imported food price inflation increased by 10bps to 17.84% y/y from 17.75% y/y recorded in the previous month.
• Core inflation increased by 85bps to 15.75% y/y from 14.90% y/y recorded in the previous month. For the core inflation, price pressure was felt across gas, liquid fuel, garment, solid fuel, and passenger transport by road among others.        
• The housing water, electricity, gas and other fuel segment increased by 14.61% y/y and 1.41% m/m. The transport segment also recorded an increase of 16.97% y/y and 1.62% m/m. These increases can be partly attributed to the price hikes in diesel, kerosene, and aviation fuel.                 
• The NBS tracks headline inflation by state, with Bauchi recording the highest (21.99% y/y) and Adamawa recording the lowest (16.14% y/y) in June ‘22. It is worth noting that household baskets vary across states due to different consumption patterns.
• The CBN in-house estimates suggest continuous upticks in inflation in the near term, driven by insecurity, exchange rate pressure and global inflation. In our view, the committee will revert to its wait-and-see stance, following the recent hike (of 150bps) in the policy rate to 13%.
• The MPC is scheduled to hold its next meeting on the 25th and 26th of July ’22.

To read the full report, click here