Headline inflation slowed to 15.91% in October from 15.98% in September. The inflation numbers confirm a trend of declining inflation, marking the ninth consecutive decline in 2017. Month-on-month inflation also eased to 0.76% (9.54% annualized) in October from 0.78% (9.77% annualized) in September.
Food and core inflation moved in opposite directions in the month of October. Food inflation declined marginally by 1bp to 20.31% from 20.32% in September. On the other hand, core inflation increased to 12.14% in October from 12.12% in September.
Essentially, inflation in Nigeria is moderating but could swing upwards if there is a surge in money supply and wages increase sharply, causing demand-pull inflation.
Breakdown of inflation data
Food inflation rose by 20.31% in October – 0.01% lower than September’s rate of 20.32%. On a month-on-month basis, food inflation fell by 2bps to 0.85% in October. This is the lowest level recorded so far in 2017. Domestic food inflation benefited from the bountiful harvest as beverages, tobacco and grains recorded price drops in the month of October. But imported food inflation spiked to 15.34% in October from 14.83% in September. This can be partly attributed to the increase in demand for export as consumer confidence improved in the last three months.
Core sub-index is back up again
The core sub-index is back up again, increasing to 12.14% in October from 12.12% in the previous month. The main drivers were mechanical maintenance and logistics cost. Diesel prices rose to N205/litre in October from N185/litre in the previous month. But an improvement in power supply – from 3,433MW/hr in September to 3,696MW/hr in October – restricted the impact of rising diesel prices.
Rural and Urban sub-index
The urban and rural sub-indexes moved in opposite directions in October, just like in the previous month. The urban index increased to 16.19% in October from 16.18%. This can be attributed to higher logistics costs in the urban region as earlier explained. While rural index declined further to 15.67% in October from 15.81%, mainly as a result of the decline in domestic food inflation in the region.
Statistics released by the NBS show that Kogi state recorded the lowest level of inflation in October – 9.83%. This was mainly driven by a bountiful harvest. Food items such as cashew and cassava recorded major increases in output during the period.
Bauchi state, on the other hand, recorded the highest inflation rate of 23.87% in October; closely followed by Nassarawa and Kebbi states, with the inflation rate of 20.23% and 19.17% respectively.