Freshly released September inflation report showed that the headline inflation rate rose to 11.24% year-on-year (from 11.02% in August 2019), a sharp reversal, and the highest in three months.
The northward movement in the annual inflation was chiefly due to the sharp increase in the annual food inflation rate, in addition to the gentle upshift in core inflation rate which, howbeit, remains single-digit.
Particularly, annual food inflation rate jumped to 13.57% in September 2019 from 13.17% in August 2019. Also, monthly food inflation climbed m-o-m to 1.30% in the month of September, from 1.22% in the month of August, amid the closure of Nigeria’s land borders. August food inflation rate rose to 16.65% (from 14.61%), 16.57% (from 14.08%), 16.31% (from 15.12%) and 16.08% (from 15.04%) in Niger State, Nassarawa, Abuja and Ogun States respectively.
The annual core inflation rate rose to 8.94% y-o-y in September 2019 from 8.68% in August 2019, partly arising from the rise in energy costs (0.16%) and transport (0.12%). Also, we saw the core inflation rate rise on a monthly basis to 0.89% (from 0.67% in August).
In the same vein, m-o-m change in price level for imported food increased by 1.28% amid the depreciation of the Naira against the USD at the interbank window where two months moving average foreign exchange rate rose (i.e Naira depreciated) m-o-m by 0.06% to N357.96/USD in September 2019.
Outlook:
“We expect the annual inflation rate to increase further in October as food prices, especially the cost of rice, increase amid border closure. However, we feel the increase will be limited as harvest season creeps in”.
