Image Credit: Coronation Research

Headline rate 21.91% y/y (21.82% January);
Core rate 18.84% y/y (19.16%); and
Food rate 24.35% y/y (24.32%).  

March 15, 2023/Coronation Economic Flashnote

• February’s headline inflation increased by 9bps (when compared with the previous month) to 21.91% y/y. Our expectation was 6bps higher at 21.97y/y.
• On a month-on-month basis, headline inflation declined to 1.71% from 1.87% recorded in the previous month.
• The food inflation (24.35%) recorded an increase of 4bps when compared with the previous month. The highest increases were recorded in the prices of oil and fat, bread, cereals, potatoes, yams and other tubers, fish, fruits, meat, and vegetable. 
• On a y/y basis, imported food price inflation increased by 2bps to 18.52% y/y from 18.50% y/y recorded in the previous month.
• Core inflation declined by -31bps to 18.84% y/y from 19.16% y/y recorded in the previous month. Inflationary pressure was felt across gas, liquid fuel, passenger transport by air, vehicle spare parts, fuel, and lubricants for personal transport equipment, and solid fuel.
• The housing water, electricity, gas and other fuel segment increased by 18.11% y/y and 1.39% m/m. The transport segment also recorded an increase of 21.43% y/y and 1.64% m/m. The increases recorded can be partly attributed to elevated prices of deregulated products such as diesel, kerosene, and aviation fuel. Furthermore, there are periodic cases of fuel scarcity, especially in the country’s commercial hub.
• Based on the NBS headline inflation by state, Bauchi recorded the highest (24.59% y/y) and Cross River recorded the lowest (19.62% y/y) in February ‘23. It is worth noting that household baskets vary across states due to different consumption patterns.
• According to the CBN/MPC, structural issues such as insecurity, inadequate power supply, and poor logistics, remain key drivers of inflation. Others include elevated commodity prices and exchange rate pressure.    February’s headline inflation increased by 9bps (when compared with the previous month) to 21.91% y/y. Our expectation was 6bps higher at 21.97y/y.
• The MPC is scheduled to hold its next meeting on 20 and 21 March ‘23. Given the MPC’s resolve to restore price stability, another policy rate hike is not far-fetched.

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