The NBS has released its June inflation report to show –
Headline rate 18.60% y/y (17.71% in May);
Core rate 15.75% y/y (14.90%); and
Food rate 20.60% y/y (19.50%).
June’s headline reading increased by 88bps (when compared with the previous month) to 18.60% y/y. On a month-on-month basis, headline inflation increased from 1.78% recorded in May to 1.82% in June ’22.
Food inflation recorded an increase of 110bps when compared with the previous month. For the food inflation rate (20.6%), 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 10bps to 17.84% y/y from 17.75% y/y recorded in the previous month.
Core inflation increased by 85bps to 15.75% y/y from 14.90% 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 among others.
The housing water, electricity, gas and other fuel segment increased by 14.61% y/y and 1.41% m/m. The transport segment also recorded an increase of 16.97% y/y and 1.62% 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 (21.99% y/y) and Adamawa recording the lowest (16.14% y/y) in June ‘22. It is worth noting that household baskets vary across states due to different consumption patterns.
The CBN in-house estimates suggest continuous upticks in inflation in the near term, driven by insecurity, exchange rate pressure and global inflation. In our view, the committee will revert to its wait-and-see stance, following the recent hike (of 150bps) in the policy rate to 13%.
The MPC is scheduled to hold its next meeting on the 25th and 26th of July ’22. To read the full report, click here . SOURCE: Coronation Merchant bank