16 May 2018

Nigeria: Inflation Rate Drops to 12.48 Percent in April

The Consumer Price Index (CPI) which measures inflation released yesterday by the National Bureau of Statistics (NBS) showed that this is the fifteenth consecutive disinflation since January 2017.

Experts are of the opinion that despite the pleasing fall in inflation, some elements of Nigeria's inflation climate prompt a less bullish view of prices.

Analysts at Cordros Capital said they find the marginal decline in the month-on-month headline inflation rate contentious, as it clearly conflicts the simultaneous month-on-month increases in both food and core inflation rates.

The research team of United Capital are of the view that high base effect from elevated food prices in the prior year accounted for the sustained moderation in headline inflation, the major items responsible in the food index included, potatoes, yam & other tubers, bread & cereals, oil & fats, fruits & vegetables, coffee tea & cocoa, milk cheese & eggs and fish.

"To this end, we highlight the marginal uptick in m/m food inflation (to 0.91% in Apr-18) for a second consecutive month, after touching 0.85 per cent in Feb-18. Nevertheless, we project May-18 inflation rate to decelerate faster, to 11.3 per cent (below the CBN's target of 12.0%), with m/m inflation rate anticipated to steady at 0.82 per cent month-on-month.

NBS said the Kebbi and Bayelsa States recorded the highest food inflation rate of 18 per cent in April even as nationwide headline inflation rate dropped to 12.48 per cent in the same month from 13.34 per cent recorded in March, 2018.

However, food inflation remains higher than the headline inflation, an indication that food prices remain high.

The Composite Food Index rose by 14.80 per cent in April 2018, being 2.32 per cent higher than the headline inflation recorded in the same month.

"The rise in the index was caused by increases in prices of Potatoes, yam and other tubers, Fish, Bread and cereals, Oil and fats, Vegetables and Meat," the report stated.

Analysis of the CPI shows that food inflation on a year on year basis was highest in Kebbi (17.92 per cent), Bayelsa (17.85 per cent) and Nasarawa (17.71 per cent).

The Urban inflation rate eased by 12.89 per cent (year-on-year) in April 2018 from 13.75 per cent recorded in March, while the Rural inflation rate also eased by 12.13 per cent in April 2018 from 12.99 per cent in March.

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