October 17, 2023/InvestmentOne Report
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- According to the National Bureau of Statistics (NBS), Headline inflation increased for the 9th consecutive month in September. Headline inflation rose by 92 bps to a year high of 26.72% y/y, higher than its record of 25.80% y/y in August. On a monthly basis, headline inflation rose by 2.10%, 108 bps less than the previous month’s increase of 3.18%.
- Likewise, food inflation experienced its ninth consecutive monthly increase, surging by 130bps to reach 30.64% y/y in September, significantly higher than the previous month’s increase of 29.34% y/y in August. On a monthly basis, food inflation showed a 2.45% rise in September, which was 141 bps lower than the 3.87% increase in August. The upswing in September’s figures was primarily driven by the price hikes in categories such as oil and fat, bread and cereals, potatoes, yam, and other tubers, fish, fruit, meat, vegetables, as well as milk, cheese, and eggs.
- In September 2023, the all-items index excluding farm produce and energy (commonly referred to as core inflation) saw a notable increase, rising to 21.84% y/y. This marked a 69bps increase from the 21.15% y/y figure reported in August. The key drivers behind this upward trend in core inflation for September were the escalating prices in various categories, including passenger transport by road, passenger transport by air, medical services, and the repair of furniture, as well as maintenance and repair of personal transport equipment.
- Looking ahead, given the persistent increase in global energy prices and the shortage of foreign exchange supply, it is our expectation that inflation will continue to stay at elevated levels. Furthermore, we anticipate that as inflation continues to rise, there is an increased likelihood of the monetary policy committee deciding to raise the monetary policy interest rate by at least 25 bps at their upcoming meeting.
