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Nigeria’s Inflation Report for October 2022: Inflation rate now 21.09%

The NBS has released its October inflation report to show –    
Headline rate 21.09% y/y (20.77% in September);

Core rate 17.76% y/y (17.60%); and
Food rate 23.72% y/y (23.34%).  

  • October’s headline reading increased by 32bps (when compared with the previous month) to 21.09% y/y. 
  • On a month-on-month basis, headline inflation declined from 1.36% in the previous month to close at 1.24% in October ’22. The NBS attributed the m/m decline to the current harvest season. We expected the m/m to remain at or above 1.5%, given the expected disruption in the supply of food products due to the incidents of flooding across states in the middle belt (i.e. the food basket region) as well as increased cost of importation on the back of persistent fx depreciation in the parallel market. 
  • Food inflation recorded an increase of 38bps when compared with the previous month. For the food inflation rate (23.72%), the highest increases were recorded in bread, cereals, meat, oil and fat, potatoes, yam, and other tubers.
  • On a y/y basis, imported food price inflation increased by 9bps to 18.08% y/y from 17.99% y/y recorded in the previous month.
  • Core inflation increased by 16bps to 17.76% y/y from 17.60% y/y recorded in the previous month. For the core inflation, price pressure was felt across gas, liquid fuel, garments, fuel, passenger transport by air and vehicle spare parts.
  • The housing water, electricity, gas and other fuel segment increased by 16.84% y/y and 1.30% m/m. The transport segment also recorded an increase of 19.0% y/y but declined to 1.47% m/m. These increases in the transport segment y/y can be partly attributed to the price hikes in deregulated products such as diesel, kerosene, and aviation fuel.
  • The NBS tracks headline inflation by state, with Kogi recording the highest (25.15% y/y) and Nasarawa recording the lowest (19.39% y/y) in October ‘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 maintain its upward trend, driven by exchange rate pressure, build-up of increased spending and demand for naira on the back of the upcoming 2023 general elections, among others. 
  • Given the MPC’s resolve to restore price stability while providing necessary support to the economy, in our view, another policy rate hike at its November meeting is not far-fetched. The MPC is scheduled to hold its next meeting on the 21st and 22nd of November ’22.
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To read the full report, clickhere. SOURCE: Coronation Merchant Bank

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