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Nigeria Inflation Report for July 2022: Inflation rises to 19.84%

The NBS has released its June inflation report to show –    
Headline rate 19.84% y/y (18.60% in June);   
Core rate 16.26% y/y (15.75%); and    
Food rate 22.02% y/y (20.60%).   

  • July’s headline reading increased by 104bps (when compared with the previous month) to 19.64% y/y.   
  • On a month-on-month basis, headline inflation remained unchanged from the previous month to close at 1.82% in July ’22.
  • Food inflation recorded an increase of 142bps when compared with the previous month. For the food inflation rate (22.02%), the highest increases were recorded in bread, cereals, fish, meat, wine, potatoes, yam, and other tubers.
  • On a y/y basis, imported food price inflation increased by 7bps to 17.91% y/y from 17.84% y/y recorded in the previous month.
  • Core inflation increased by 51bps to 16.26% y/y from 15.75% y/y recorded in the previous month. For the core inflation, price pressure was felt across gas, liquid fuel, garments, solid fuel, cleaning, repair and hire of clothing, passenger transport by road and air.       
  • The housing water, electricity, gas and other fuel segment increased by 15.28% y/y and 1.42% m/m. The transport segment also recorded an increase of 17.58% y/y and 1.63% m/m. These increases can be partly attributed to the price hikes in premium motor spirit, diesel, kerosene, and aviation fuel.                
  • The NBS tracks headline inflation by state, with Akwa-Ibom recording the highest (22.88% y/y) and Jigawa recording the lowest (16.62% y/y) in July ‘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. 
  • We expect data releases such as the Q2 ’22 national accounts and August’s inflation report to provide guidance on the MPC’s policy stance at its September meeting. This is largely due to the committee’s resolve to restore price stability while providing necessary support to the economy. In our view, another rate hike in September 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. SOURCE: Coronation Merchant Bank Research team

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