Inflation Outlook

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.

INFLATION OUTLOOK – FEBRUARY 2019

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