The September 2020 Inflation rate report by the National Bureau of Statistics (NBS) is expected to be released on the 15th of October 2020. Meristem analysts envisage an uptick in the headline inflation rate to 13.49%, from 13.22% reported in August 2020.
In Nigeria, the lingering inflationary pressures will remain the key drivers of upward price movement. However, we expect the increment of the pump price of petrol in September to drive core inflation, while higher food prices will continue to spur headline inflation higher.
In the months leading up to September, we cited the sustained border closure, insecurity challenges in Northeast Nigeria and flooding in Key food-producing areas, as major factors that have kept food prices elevated.
The planting season finally resumed in September following the “August break” of the rainy season, which we expect to positively impact food supply over the coming months. However, in the near term, the supply shortfalls of farm produce will persist, and this is expected to spur more food price hikes in the month.
In September, the Petroleum Products Pricing Regulatory Agency (PPPRA) revised the pump price of petrol to NGN151.56 from NGN138.62 in August. We expect this to have a ripple effect on costs and prices (see chart 2). As a direct consequence, we expect higher transportation and logistics costs.
Data from CBN’s September PMI report support our expectation, as it revealed that input (69.8pts in September vs 66.8pts in August) and output (58.8pts in September vs 58.4pts in August) prices rose during the month.