The NBS has released its May inflation report to show –

Headline rate 22.41% y/y (22.22% April);
Core rate 20.06% y/y (20.14%); and
Food rate 24.82% y/y (24.61%).  

• May headline inflation increased by +19bps (when compared with the previous month) to 22.41% y/y
• On a month-on-month basis, headline inflation increased to 1.94% from 1.91% recorded in the previous month
• The food inflation (24.82%) recorded an increase of +21bps 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, vegetables, and spirits.
• On a y/y basis, imported food price inflation increased by +7bps to 18.72% y/y from 18.65% y/y recorded in the previous month.
• Core inflation increased by +8bps to 20.06% y/y from 20.14% y/y recorded in the previous month. Inflationary pressure was felt across gas, passenger transport by air, liquid fuel, lubricants for personal transport equipment, vehicle spare parts, fuels and lubricants for personal transport equipment, medical services, as well as passenger transport by road.
• The housing water, electricity, gas and other fuel segment increased by 16.86% y/y and 1.35% m/m. The transport segment also recorded an increase of 23.87% y/y and 2.18% m/m. These increases in the transport segment can be partly attributed to sporadic PMS scarcity within the month and elevated prices for deregulated products such as diesel, kerosene, and aviation fuel.
• Based on the NBS headline inflation by state, Ondo recorded the highest (25.84% y/y). Meanwhile, Plateau recorded the lowest (19.89% y/y) in May ‘23. It is worth noting that household baskets vary across states due to different consumption patterns.
• Inflation continues to be largely driven by structural issues such as insecurity, poor logistics, and energy supply, elevated commodity prices, and exchange rate pressure, among others. The CBN/MPC has hiked the policy rate by +50bps to 18.5% in May 2023.
• Looking ahead, the recent PMS subsidy removal and the liberalization of the fx market is expected to lead to further upticks in headline inflation.

To read the full report, click here