September Inflation: Flooding in key Northern states spur food inflation higher!

Must Read

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -

As widely anticipated, headline inflation for the month of September increased for the seventh consecutive month by 47bps to 13.71% YoY, 58bps shy of our estimate of 14.29%. For us, we had anticipated a higher increase in headline inflation hinged on varying triggers.

These include the adverse impact of elevated transport cost, recent flooding encountered in northern Nigeria, the uptick in PMS retail selling price from N138.62 to a range of N155/litre to N160/litre, and the hike in electricity tariff which was implemented on the 1st of September 2020.

September Inflation: Flooding in key Northern states spur food inflation higher!
Photo by Easton Mok

Although the tariff hike was suspended for a period of two weeks (September 28th to October 12th, 2020), information gathered from the DISCOs showed the increased tariff was implemented on a pro-rata basis from 1st to 27th of September 2020. We expected this to filter through core inflation.

Surprisingly, core inflation rose only 9bps to 10.59% YoY, despite the double-digit increases across major core sub-indices. Casting our minds to the 45% electricity hike in 2016, the HWEGF basket rose by 653bps in February. Furthermore, other supply shocks evident in the similar period led to double-digit increases across all key sub-indices, driving a 220bps expansion in core inflation.

- Advertisement -

Therefore, the outturn is core is surprising to us. Across the core index, expansions were seen in HWEGF (+16bps), Health (+50bps), Transport (+44bps), Furnishing (+23bps), Clothing (+20bps), amongst other core sub-indices.

Read Also:  Nigeria’s Inflation Drops to 15.13% in January 2018 - NBS

Meanwhile, food inflation significantly rose 64bps to 16.65% YoY reflecting flooding in localized areas in the North, precisely in Kebbi and Niger state, as well as the extended lean season, according to FEWSNET. This was evidenced in farm produce which ticked 92bps higher to 17.29% YoY, outweighing moderations in imported (-1bp to 16.43% YoY) and processed (-230bps to 9.9% YoY) food inflation.

Akin to the annual numbers, the month on month numbers revealed headline inflation rose 11bps to 1.46% MoM and 54bps shy of our estimate of 2% MoM. Precisely, food inflation anchored the uptick, rising 18bps to 1.86% MoM owing to a 33bps increase in farm produce to 2.04%, MoM.

Notably, core inflation declined 7bps to 0.97% MoM despite increases across core sub-indices including Transport (+5bps), HWEGF (+4bp), Clothing (+4bp), Furnishing (+3bps) amongst other sub-indices.

- Advertisement -

Going forward, while the main season harvest in October is expected to curtail the pace of expansion in headline inflation, we believe the flood experienced in key Northern states poses a risk to food prices. For context, media sources revealed that farmers in Northern Nigeria have lost a significant portion of their harvest to flooding. That said, inflation for the month of October is expected to print at 14.04% YoY and 1.35% MoM.

Read Also:  INFLATION INCREASES BY 11.44% IN DECEMBER 2018; 0.16% HIGHER THAN NOVEMBER 2018 RATE

ARM Securities Research

- Advertisement -
September Inflation: Flooding in key Northern states spur food inflation higher! - Brand SpurSeptember Inflation: Flooding in key Northern states spur food inflation higher! - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

September Inflation: Flooding in key Northern states spur food inflation higher! - Brand SpurSeptember Inflation: Flooding in key Northern states spur food inflation higher! - Brand Spur

Latest News

ILO and LinkedIn launch data insights partnership

The International Labour Organization (ILO), the Partnership for Action on Green Economy (PAGE) and LinkedIn have launched a two-year...

MoneyGram Expands Real-Time Digital P2P Payments with Visa Direct through New Checkout.com Partnership

Customers can use the MoneyGram website or leading mobile app to send money in near real-time to Visa debit cardholders across 575 corridors from...

$85.8m ‘Debt’: Appeal Court Unseals Seplat Petroleum’s Offices

Seplat announces that the Court of Appeal sitting in Lagos has today suspended the Order of Interlocutory Injunctions made by the Lagos Federal High...

Majority Optimistic About Tech in 2021, But Health, Jobs and Environment Top Personal Risk List

Geneva, Switzerland, 22 January 2021 — A new World Economic Forum/Ipsos survey found most adults are optimistic about accessing technology, digital tools and training in the...

Bears Dominated Proceedings in the Equities Market this Week

Equities market closed the week on a bearish note with selloffs witnessed across major tickers. The benchmark All Share Index (ASI) declined by 24bps...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -September Inflation: Flooding in key Northern states spur food inflation higher! - Brand SpurSeptember Inflation: Flooding in key Northern states spur food inflation higher! - Brand Spur