Nigerian Financial Markets Report

Dear Esteemed Client:

The National Bureau of Statistics (NBS) earlier today released the October Consumer Price Index (CPI) data, which showed that the Headline Inflation figure further accelerated to 11.61% from 11.24% recorded for September-2019. Although the report stated that increases were recorded in all COICOP (Classification of Individual Consumption by Purpose) components of the CPI, the rise in CPI was majorly attributed to increase in the Food Sub-Index, which rose by 14.09% Y-o-Y and 1.33% M-o-M in October, the highest annual growth since May 2018 and highest month on month rise since September-2018. The NBS’ October report attributed the higher food inflation to increases recorded in prices of meat, oils and fats, bread and cereals, potatoes, yam and other tubers as well as fish and vegetables. In our view, this is partly due to the land boarder closure, which took effect in August 2019 and is also taking a toll on the prices of some consumer staple foods. Nevertheless, Core sub-component of the CPI, which excludes the prices of volatile agricultural produce, declined to 8.88%, 6bps lower when compared to September figures which printed at 8.94%.

As we gradually move towards the yuletide season, we expect the pressure on food prices to remain daunting and may push November Inflation closer to 11.90% and December growth rate in CPI to north of 12.00% based on our analysis of the CPI. On the Investment front, the dearth of supply of fixed income securities, especially at the short term end of the market, has already pushed one-year treasury yield to 9.93% as at the close of trade today and we anticipate the yield compression to continue in the
near term. Read more

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