Nigeria’s Inflation Report – May 2022 by Coronation Merchant Bank

The NBS has released its May inflation report to show –

Headline rate 17.71% y/y (16.82% in April);        
Core rate 14.90% y/y (14.18%); and          
Food rate 19.50% y/y (18.37%).

• May’s headline reading increased by 89bps (when compared with the previous month) to 17.71% y/y.       
• On a month-on-month basis, headline inflation increased from 1.76% recorded in April to 1.78% in May ’22.
• Food inflation recorded an increase of 113bps when compared with the previous month. For the food inflation rate (19.50%), 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 9bps to 17.75% y/y from 17.66% y/y recorded in the previous month.
• Core inflation increased by 72bps to 14.90% y/y from 14.18% y/y recorded in the previous month. For the core inflation, price pressure was felt across gas, liquid fuel, garment, solid fuel and passenger transport by road.           
• The housing water, electricity, gas and other fuel segment increased by 13.85% y/y and 1.39% m/m. The transport segment recorded an increase of 15.39% y/y and 1.56% m/m. These increases can be partly attributed to the price hikes in diesel, kerosene, and aviation fuel.                   
• The NBS tracks headline inflation by state, with Bauchi recording the highest (20.62% y/y) and Kwara recording the lowest (15.45% y/y) in May ‘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 expected increase in spending on the back of the upcoming 2023 general elections. 
• At its last meeting, which was held in May, the MPC raised the policy rate by 150bps to 13%. The committee expects the recent policy rate hike to help moderate inflationary pressure and exchange rate depreciation, reduce the speed of capital flow reversals, provide an incentive for foreign capital inflows, and sustain remittances.
• The MPC is scheduled to hold its next meeting on the 26th and 27th of July ’22.

To read the full report, click here. SOURCE: Coronation Merchant Bank