Inflation settled within a narrow range

The latest report from the NBS has headline inflation y/y at 11.4% in December, a rise of 16bps on the previous month. Food price inflation rose by 26bps to 13.6% y/y while the core measure was unchanged at 9.8%. Our expectation, shared with the wires, was 11.8% y/y for the headline measure, based upon the view that insecurity in food growing areas would have a greater negative impact.

  • Since September the m/m increases in the headline and core measures have settled below 0.85% and 0.80% respectively, indicating the prevailing weakness of domestic demand. The mooted rise in the national minimum wage, which would surely provide some boost to spending, remains work in progress and is in danger of being lost in a committee formed by the president.
  • We can also see the weakness of demand in the fact that there was no seasonal boost to inflation in December: in fact, m/m core inflation slowed in the month.
  • The report also tracks inflation by state, with the highest 1.7% m/m in Kebbi in December and the lowest 0.1% in Ogun. However, it cautions that household baskets vary across states. Yobe’s food price inflation of 2.4% m/m was the highest of all states.
Consumer price inflation (y/y; % chg)

Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research
  • The monetary policy committee will announce its latest decision next week. The personal statements emerging from its last meeting in November showed that it was relaxed about inflationary pressures, and more concerned with the direction of the oil price and feeble domestic credit growth. We expect therefore yet another unchanged stance.

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