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• According to the recent Consumer Price Index (CPI) figures released by the National Bureau of Statistics (NBS), inflation continued its upward trend for the fourth consecutive month. In April, the headline inflation rate rose by 18bps to reach 22.22% y/y, compared to the previous reading of 22.04% y/y in March. Moreover, this represents a significant increase of 540bps when compared to the inflation rate of 16.82% y/y recorded in April 2022.
  

• In details, the food basket continued to exert significant pressure on the heightened inflation figures, aligning with established patterns. Specifically, the food index recorded an upward trajectory, reaching 24.61% y/y in comparison to 24.45% y/y in March. The report attributes the surge in food inflation to notable price increases in oil and fat, bread and cereal, fish, potatoes, yams and other tubers, fruits, meat, vegetable, and spirits. Furthermore, food inflation settled at 2.13% m/m, surpassing the 2.07% m/m recorded in March.  
• In a similar trend, core inflation advanced to 20.14% y/y in April, showing a 28bps increase from the 19.86% y/y figure recorded in March. Further insights from the report revealed that prices of gas, liquid fuel, passenger transport by air, medical services, and vehicle spare parts were major catalysts behind the upswing in core inflation figures. Conversely, the core inflation sub-index declined to 1.46% m/m compared to the 1.84% m/m registered in the previous month. We highlight that the surge in the core index was underpinned by the elevated prices of gas and lingering currency pressures.
• Looking ahead, we expect inflationary pressures to remain prevalent in the near to medium term driven by persistent pressures from the food index which constitutes a significant part of overall CPI. The unabating security challenges in food producing parts of the country, poor road and transportation networks, higher cost of production as well as elevated energy prices should continue to drive inflation upwards and stoke further pressure on the supply-side components causing high inflation in Nigeria.
• Nonetheless, we envisage further interest rate hike by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) given the hawkish tone of the Governor of the bank in past meetings and the commitment to tame inflation and reduce the negative real return gap on investments.