September 18, 2023/InvestmentOne Report
Please click to download our August 2023 Inflation Update
- In the latest release of the Consumer Price Index (CPI) figures by the National Bureau of Statistics (NBS), inflation has exhibited a persistent upward trajectory, with the most recent data for August showcasing a particularly significant surge. In August, the headline inflation rate rose by 172bps, reaching 25.80%y/y. This represents a substantial acceleration from July’s rate of 24.08% y/y. On a month-on-month basis, the headline inflation increased by 29bps to 3.18%.
- In the month of August, a noteworthy surge was observed in the food index, characterized by a substantial increase of 236bps. This upward movement propelled the food index to a notable 29.34% y/y from 26.98% y/y in July. This surge in food inflation can be attributed to significant price hikes across various categories including Oil & fat, Bread & cereal, fish, potatoes, yams & other tubers, fruits, meat, vegetables, milk, cheese, and eggs.
- Meanwhile, the core inflation metric displayed a gradual upward trend, increasing by 68bps to reach a year-on-year rate of 21.15%, up from July’s 20.47%. This uptick was primarily driven by notable price hikes in critical sectors, including Air and Road Passenger Transport, Medical Services, Vehicle Spare Parts, and Personal Transport Equipment Maintenance.
- Moving forward, we expect inflation to trend higher as global energy prices remain elevated following decisions to maintain production cuts by OPEC+ power houses. The upcoming MPC meeting, scheduled for September 25th and 26th, is anticipated to result in either a decision to maintain the current interest rate or a possibility of a 25bps increase.
