November 15, 2024/Coronation Research
The NBS has released its October inflation report to show
Headline rate: 33.9% y/y (32.7% in September)
Core rate: 28.4% y/y (27.4%)
Food rate: 39.2% y/y (37.8%)
- Headline inflation increased by 118bps to 33.9% y/y from 32.7% y/y in September ’24, largely driven by food inflation. On a month-on-month basis, headline inflation rose by 12bps to 2.6% from 2.5%.
- Food inflation surged by 139bps to 39.2% y/y, and 2.9% m/m in October ’24, primarily due to rising prices of staples like rice, maize, oil & fats, coffee, tea, cocoa, potatoes, yam and other tubers. The persistent structural challenges, including insecurity, inadequate storage, and infrastructure facilities, further strained supply. Floods disrupted agricultural production in key food-producing states.
- Imported food inflation surged by 145bps to 41.0% y/y from 39.5% y/y in September. This can be largely attributed to the pass-through effect of currency depreciation, as the US dollar value of the Naira has depreciated by 54.9% y/y to close at N1,675.5/US$1 as at end-October ’24.
- Core inflation (all items excluding farm produce and energy) rose by 94bps to 28.4% y/y from 27.4% y/y recorded for the previous month. Inflationary pressure was felt across passenger transport by road, housing rentals, restaurants & accommodation services, hairdressing salons and personal grooming services.
- Another measure of core inflation (including energy) increased by 93bps to 27.4% y/y. We observe the effects of recent fuel price hikes affecting both year-on-year and month-on-month price rises. Consequently, inflation in the transport segment rose by 205bps to 29.3% y/y and 3% m/m in October ’24, reflecting the direct impact of fuel price hikes.
- The Monetary Policy Committee has cumulatively hiked Policy rate by +850bps this year, to 27.25%. At the next MPC meeting scheduled to hold on 25th and 26th of November, we forecast continued tightening of the policy rate (a moderate hike of between 50bps and 100bps).
- Looking ahead, inflation is expected to remain elevated over the coming three months.
To read the full report click here
