Inflation again flattish

Headline inflation has now remained within a range of 11.0% to 11.5% y/y since June 2018. In January the rate declined by 7bps to 11.4% y/y. Food price inflation fell by 5bps to 13.5% while the core measure picked up from 9.8% to 9.9% y/y. Our expectation, shared with the wires, was 11.6% y/y for the headline measure, based upon the impact of insecurity in growing areas on food prices.

  • There was an acceleration in m/m core inflation from 0.50% to 0.81% in January, which could arguably be explained by campaign spending ahead of the current elections. This trend may well be visible in the February data, too.

  • Household demand remains under pressure. This was earlier apparent in the NBS report for December, which showed a slowdown in m/m core inflation in the month of peak spending for the Christmas holiday.

  • The report also tracks inflation by state, with the highest 1.7% m/m in Delta. In three states the rate was negative (Ekiti, Nasarawa and Osun). However, the NBS notes that household baskets vary across states. Delta’s food price inflation of 2.7% m/m was the highest of all states.


Consumer price inflation (% chg y/y)

Sources: National Bureau of Statistics (NBS); FBNQuest Research


  • The proposed increase in the national minimum wage will surely provide some boost to spending (and inflation) although its introduction is not likely before June at the earliest. It is incorporated in the FGN’s projection of personnel spending of N2.45trn in its 2019 budget proposals, compared with N2.11trn in the 2018 budget and the outturn of N1.87trn in 2017. We cannot see how many state governments will be able to pay the new minimum of N27,000.
  • For February we expect a pick-up in the headline rate to 11.7% y/y.


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