March 18, 2024/InvestmentOne Report

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• According to recent data from the National Bureau of Statistics (NBS), headline inflation rate maintained it northward trajectory in February 2024, increasing by 180bps to print at 31.70% y/y. This advancement was majorly driven by increases in both the food and core basket which respectively rose to 37.92% y/y and 25.13% y/y from 35.41% y/y and 23.59% y/y in the previous month. Similarly, on a monthly basis, the headline inflation rate rose faster by 48bps to 3.12% m/m, buoyed by a 58bps increase in the food index to 3.79% m/m, while the core index slowed by 7bps to 2.17% m/m.
• According to the report, the food inflation rate rose to 37.92% y/y in comparison to 35.41% y/y recorded in February 2023. This upsurge was attributed to notable price increases in Bread and cereals, Potatoes, Yam and other Tubers, Fish, Oil and fat, Meat, Fruit, Coffee, Tea, and Cocoa. Similarly, on a monthly basis, the food inflation rate advanced to 3.79% m/m, 58bps higher than the reading posted in January 2024.
  

• In February 2024, core inflation rate rose to 25.13% y/y from 23.59% y/y recorded in the preceding month, reflecting a 154bps increase during the month. However, on a monthly basis, the core inflation rate decelerated by 7bps to 2.17%, largely on the back of the impact of a high base. Notably, the transportation index remained the biggest contributor to the increase in core inflation rate, posting a high of 26.06% y/y.
  

• Going forward, we expect inflationary pressures to persist into March, particularly due to heightened demand fueled by the Easter celebration amid Ramadan stockpiling. Despite the inflation targeting policy of the Central Bank of Nigeria (CBN), headline inflation rate is expected to remain at elevated levels in the near term, owing to the unresolved issues in the agricultural sector.