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August 2022 Inflation Report – Coronation Merchant Bank

The NBS has released its August inflation report to show –    
Headline rate 20.52% y/y (19.64% in July);     
Core rate 17.20% y/y (16.26%); and      
Food rate 23.12% y/y (22.02%).    

  • August’s headline reading increased by 88bps (when compared with the previous month) to 20.52% y/y.  
  • On a month-on-month basis, headline inflation decreased from 1.82% y/y in the previous month to close at 1.77% in August ’22.
  • Food inflation recorded an increase of 110bps when compared with the previous month. For the food inflation rate (23.12%), the highest increases were recorded in bread, cereals, fish, meat, oil and fat, potatoes, yam, and other tubers.
  • On a y/y basis, imported food price inflation increased by 3bps to 17.94% y/y from 17.91% y/y recorded in the previous month.
  • Core inflation increased by 94bps to 17.20% y/y from 16.26% y/y recorded in the previous month. For the core inflation, price pressure was felt across gas, liquid fuel, garments, solid fuel, lubricants for personal transport equipment and passenger transport by road and air.      
  • The housing water, electricity, gas and other fuel segment increased by 15.92% y/y and 1.40% m/m. The transport segment also recorded an increase of 18.24% y/y and 1.64% m/m. These increases can be partly attributed to the price hikes in petroleum products like premium motor spirit, diesel, kerosene, and aviation fuel.
  • The NBS tracks headline inflation by state, with Ebonyi recording the highest (25.33% y/y) and Jigawa recording the lowest (17.30% y/y) in August ‘22. It is worth noting that household baskets vary across states due to different consumption patterns.      
  • The CBN’s in-house estimates suggest that inflation is expected to remain considerably high, partly due to the build-up of increased spending related to the 2023 general elections. 
  • Given the MPC’s resolve to restore price stability while providing necessary support to the economy, in our view, another rate hike this year is not far-fetched.  
  • The MPC is scheduled to hold its next meeting on the 26th and 27th of September ’22.
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To read the full report, click here

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