November 15, 2023/Coronation Research

The NBS has released its October inflation report to show –

Headline rate 27.33% y/y (26.72% September);

Core rate 22.58% y/y (21.84%); and
Food rate 31.54% y/y (30.64%). 

• October headline inflation increased by +61bps (when compared with the previous month) to 27.33% y/y.
• On a month-on-month basis, headline inflation moderated by -37bps to 1.73% compared with 2.10% recorded in the previous month.
• The food inflation (31.54%) recorded an increase of +88bps when compared with the previous month. The highest increases were recorded in the prices of vegetables, milk, cheese, eggs, bread, cereals, potatoes, tubers (potatoes, yam among others), fish, oil, and fat.
• On a y/y basis, imported food price inflation increased by +104bps to 22.76% y/y from 21.72% y/y recorded in the previous month.
• Core inflation increased by +73bps to 22.58% y/y from 21.84% y/y recorded in the previous month. Inflationary pressure was felt across, passenger transport by air and road, medical services, housing, and pharmaceutical products.
• The housing water, electricity, gas and other fuel segment increased by 22.90% y/y and 1.68% m/m. The transport segment also recorded an increase of 27.04% y/y and 1.35% m/m.
• Based on the NBS’ headline inflation by state, Kogi recorded the highest (34.20% y/y). Meanwhile, Borno recorded the lowest (20.06% y/y) in October ‘23. It is worth noting that household baskets vary across states due to different consumption patterns.
• Inflation continues to be driven by structural issues such as high logistic costs, poor infrastructure, storage issues, exchange rate pressure, elevated cost of PMS as well as insecurity (especially in food-producing areas).
• Given the sustained upticks in headline inflation (+551bps, this year), we expect the MPC to moderately hike the policy rate at its next meeting scheduled to hold on 20^th and 21^st of November.

To read the full report, click here