Base Effect Gains Ground to a Halt as August Headline Inflation Rose to 11.23%

September 14, 2018/Cordros report

The National Bureau of Statistics (NBS) just published August 2018 inflation report, showing that Nigeria’s headline consumer price index reversed its eighteenth consecutive month of decline (which started in January 2017). Headline inflation printed 11.23% y/y in August, up from 11.14% y/y in July. The data came in 8 bps below our forecast of 11.31% y/y and 8 bps ahead of Bloomberg compiled average estimate of 11.1% y/y. On month-on-month basis, the headline index moderated to 1.05% (vs. 1.13% the previous month) – thereby extending its decline from the prior month.

Food inflation rose by 13.16% y/y in the review period, higher than the 12.85% y/y recorded in July. Instructively, the highest increase was recorded in the prices of bread and cereal, potatoes, yam and other tubers, meat, vegetables, fish, fruits and oil and fat. On month-on-month basis, food inflation ticked faster at 1.42%, compared to the 1.40% recorded in the previous month.

Core inflation was 10.02% y/y during the review period, vs. 10.18% in July. The highest increases were reported in the prices of domestic services and household services, dental services, hospital services, medical services, repair of household appliances, tobacco, wine and repair of furniture. On a m/m basis, the core index increased at a slower pace of 0.78%, 3 bps below the 0.81%% reported in July.

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