Inflation in a narrow range

Headline inflation has settled within a range of 11.0% to 11.5% y/y since June 2018. In February the rate declined by 6bps to 11.3% y/y. Food price inflation fell by 4bps to 13.5% while the core measure declined from 9.9% to 9.8% y/y. Our expectation was 11.7% y/y for the headline measure, based upon the impact of insecurity on food prices as well as upon election-related spending.


  • The y/y rate of core inflation has been single-digit since September and slowed in December when private consumption demand tends to rise for the holiday season. It declined from 0.7% to 0.5% m/m in December.

  • We have therefore another reminder that household wallets are squeezed. It is not the case that households face rising import prices: fx is freely available and exchange rates have been stable in the main windows for 18 months.

  • The NBS report tracks inflation by state, with the highest 1.9% m/m in Taraba. In two states the rate was negative (Delta and Kogi). However, the NBS notes that household baskets vary across states. Taraba’s food price inflation of 3.0% m/m was the highest, probably reflecting shortages and insecurity.


Consumer price inflation (y/y; % chg)

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 the timing of its introduction is uncertain. 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 March we expect a modest pick-up in the headline rate to 11.4% y/y.

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