The decline in the y/y headline inflation rate, according to some analysts was jointly due to a 31bps and 73bps y/y decline in food inflation and core inflation rate to 20.3% and 13.4% respectively, supported largely by a high base-year effect from 2020.
However, on a m/m basis, the headline inflation rate climbed by 10bps to 1.0% from 0.9% in July 2021. Interestingly, while the food inflation rate rose 20bps m/m to 1.1%, the core inflation rate moderated by 53bps to 0.8% in August 2021.
According to Afrinvest Research analysts, “In terms of the m/m performance of each component item of the CPI basket, we observed that the imported food index rose the highest, up 5.8 points m/m to 451.9 index points in August 2021. This was closely followed by domestic food index (up 4.8 points to 451.9 points), Housing, Water, Electricity, Gas & Other fuels (up 3.9 points to 314.5 points), and Transport (up 3.7 points to 346.0 points).
We attribute the sharp increase in the m/m imported food index to the recent high inflation rate in advanced economies and the pass-through effect of Naira devaluation. We link the sharp increase in the domestic food index to supply shortage from the agrarian communities and high logistic costs. “Meanwhile, we attribute the pressure on both Housing, Water, Electricity, Gas & Other fuels, and Transport to the increase in the prices of energy items save for PMS and Electricity that are still subsidized.“
- Bismarck Rewane, said recently that the moderation in inflation and the spike in GDP growth to 5.01% increases the probability of a cut of 50basis points to 11.0%p.a. in the Monetary Policy Rate, being the Central Bank of Nigeria (CBN) ‘s anchor rate at which at the banks use in lending to customers at its September meeting