Nigeria’s inflation slows after fifteen months in February

LAGOS (Capital Markets in Africa) – Inflation in February accelerated at a slower pace to 17.87% YoY (January: 18.72% YoY; Consensus Estimate: 17.32% YoY), with prices pulling back after fifteen months of consecutive increase. Whilst the rise in food prices remained strong in February at 18.53% YoY, the “All Items Less Farm Produce Index” ( a proxy for core inflation) provided the buffer for the headline CPI, moderating for the third consecutive month to 16.01% YoY (January: 17.87% YoY). On a monthly basis, inflation accelerated by 1.49% MoM, an uptrend from the 1.01% MoM recorded in January and the monthly price change in February 2016 – 0.68% MoM. 

Food inflation surges on higher domestic food prices
Food Inflation quickened to 18.53% YoY, its highest level since Feb’09 – 20.04% YoY. In our view, the steeper rise in food prices came from higher domestic food prices during the period as Imported Food Inflation declined to 19.44% YoY from 20.95% YoY.  The most significant price increases were observed on staples such as bread, protein, and tubers. MoM food inflation registered an appreciable increase, nine-month high of 1.99% (January: 1.29% MoM) with the Imported food index rising by 1.42% MoM. This indicates considerable exchange rate pass-through from the parallel market, where the Naira depreciated by 9% in the period under review.

Core inflation reflects mixed trend YoY and MoM
The disaggregated core CPI shows a broad-based deceleration in YoY inflation as the index eased to 16.01% YoY from 17.87% YoY in January. Nine out of the ten sub-categories listed under the “All items less Farm Produce Index” increased at a slower rate, including the heavy weight “Utilities”, “Clothing & Footwear”, “Durables” indexes which printed at 20.44% YoY, 17.39% YoY and 13.27% YoY from 27.19% YoY, 17.83% YoY and 13.90% YoY respectively in January. From a monthly perspective however, inflation increased by 1.10%, 0.42 percent points higher than the 0.68% recorded in January. This reflects a pick-up in prices across all the sub-categories save for the “Miscellaneous Items” index which eased to 0.53% MoM in February from 0.61% MoM in January.

See link to the Inflation report as released by the NBS.