June 19, 2024/CSL Research
According to the latest Consumer Price Index (CPI) report for May 2024 released by the National Bureau of Statistics (NBS), the headline inflation rate, increased by 33.95% y/y in the month of May 2024, 26 basis points (bps) higher than the recorded growth of 33.69% y/y in April 2024. This was closely in line with our 34.00% forecast for the month of May 2024.
However, the headline inflation rate for the month of May 2024 was 1,154bps higher than the 22.41% y/y growth rate reported in May 2023. On a month on month (m/m) basis, the headline inflation rate came in at 2.14% m/m which was 15bps lower than 2.29% in April 2024.
The CPI basket saw the highest increases in food and non-alcoholic beverage (+40.50% y/y), imported food (+34.83% y/y), housing, water, electricity, gas, and other fuel (+29.63% y/y) restaurant and hotels (+28.60% y/y) and transport (+25.63% y/y).
The food inflation rate rose by 13 basis points (bps) to 40.66% y/y in May 2024, up from 40.53% in April 2024. However, it was significantly higher, by 1,584 bps, than the 24.82% y/y growth rate reported in May 2023. On a month on month (m/m) basis, the food inflation rate slowed to 2.28% in May 2024 from 2.50% in April 2024. The y/y increase in the food inflation rate was driven by notable price hikes in legumes, flour, stem tubers, oils and fats, fish, poultry, and meat.
The core inflation rate (“All Items Less Farm Produce and Energy”) increased by 27.04% y/y in May 2024, which is 20 bps higher than the 26.84% recorded in April 2024. This rate is also significantly higher, by 721 bps, than the 19.83% y/y recorded in May 2023.
We expect to begin to see a slight decline in inflation rate from the month of June as we forecast the headline inflation will decline to 33.84% in largely due to base effect. If signed by the President of Federal Government of Nigeria, President Ahmed Bola Tinubu, the anticipated executive order for a six-month suspension of import duties on staple food items, drugs and other essential items may be an added incentive to cause a faster deceleration in the nation’s Headline Inflation rate in the coming months.
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