Inflation Outlook


Further decline in Headline Inflation expected in February 2019

The Nigerian Bureau of Statistics (NBS) is expected to release the Consumer Price index figure that measures inflation, for the month of February, on 15 March 2019, in line with the data release calendar on its website. We expect the year-on-year rate of inflation to drop to 11.30% from 11.37% recorded in January, as a result of a slower pace of growth in prices in February 2019.


Inflation Expectation

We expect the Consumer Price Index for February will rise to 278.6 pts, representing a month-on-month increase of +0.69%. We expect the increase will result in an inflation figure of 11.30%, lower than the 11.37% recorded for January 2019.


Slower growth in Food Sub-Index, lower Non-Food Sub-Index

A review of prices of food and non-food items for the month of February 2019 showed a slower pace of growth in the average prices of food items when compared to January 2019, while the non-food sub-index dropped. This resulted in a +0.25% month-on-month rise in the Food Sub-Index (Items) to 299.7pts, while the All-items-less-farm produce or core sub-index dropped by -0.35% month-on-month at 257.9pts. This is expected to lower headline inflation by ca -0.62% month-on-month, despite electioneering spending during the month of February.


Rise in Global Food Price Index (FFPI) of the Food and Agriculture Organization (FAO) did not exert pressure on prices of goods in the domestic market

The Food and Agriculture Organization Food Price Index (FFPI) averaged 164.7 pts in January 2019 vs 161.9 pts recorded in December 2018, representing a 2nd consecutive month-on-month rise in 2019. The rise in February is reflective of higher prices in most commodities represented in the FFPI, with Dairy food item index registering the sharpest rise ca +5.6% month-on-month. However, this had little impact on prices of food items in the domestic market.


Naira depreciates marginally at the interbank FX market, stable at the Parallel market

The Naira depreciated month-on-month in the interbank market by +0.03%, while remaining stable at the parallel market at ₦360/$1. Intervention be the Central Bank (CBN) at the Investors and Exporters FX (I & E FX) window dropped ca -67% at ₦146 million in February 2019, on improved month-on-month Foreign Portfolio Inflow (FPI) at ₦1.749 billion.


Important Disclaimers
This document has been issued and approved by AIICO Capital and is based on information from various sources that we believe are reliable. However, no representation is made that it is accurate or complete. While reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors or fact or for any opinion expressed herein. This document is for information purposes only. It does not constitute any offer or solicitation to any person to enter into any trading transaction.
Investments discussed in this report may not be suitable for all investors. This report is provided solely for the information of AIICO Capital clients who are then expected to make their own investment decisions. AIICO Capital conducts designated investment business with market counter parties and customers and this document is directed only to such persons. AIICO Capital accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. This report is for private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of AIICO Capital. Users of this report should bear in mind that investments can fluctuate in price and value. Past performance is not necessarily a guide to future performance.
AIICO Capital is regulated by the Securities and Exchange Commission, and is licensed to provide fund and portfolio management services in Nigeria.