The National Bureau of Statistics (NBS) just released the inflation rate for the month of Dec 17, with Headline inflation moderating to 15.37%y/y. This was 0.53 percent point lower than the rate recorded in November (15.90%), making it the eleventh consecutive decline in headline y/y inflation since Jan-17. On a month-on-month (m/m) basis, the CPI rose 0.6%, 19bps lower than Nov-17’s 0.78%, .
The food inflation sub-index rose 19.42%y/y, down from 20.30% recorded in Nov-17. On the other hand, the imported food sub-index increased 15.9% y/y up from 15.8% in Nov-17 while the core inflation index rose 12.1% y/y down from 12.20% recorded in Nov-17.
According to the NBS, the major items responsible for the sustained pressure on the food index albeit at a slower rate were prices of bread and cereals, potatoes, yam and other tubers, coffee tea, and cocoa, milk cheese and eggs, fish and oils and fats. In the core sub-index, higher prices of Fuel and lubricants for personal transport equipment, solid fuels, passenger transport by air, amongst other items, accounted for the increase.
For the headline index, the highest increases were observed in the prices of bread & cereals, potatoes, yam, & other tubers, cocoa, tea & cocoa, milk, cheese & egg, oil & fats, and fish.
Looking ahead, we expect the recent deceleration in headline inflation to be sustained, supported by a pullback in food inflation, thanks to base effects from 2017. We also see headline inflation moderating below 13% before Jun-18. However, a renewed pressure on the general price level is likely to be driven by election spending and a possible wage review by H2-18.
United Capital Plc Research (UCR)