Freshly released Consumer Price Index (CPI) data by the National Bureau of Statistics (NBS) showed that the annual inflation rate maintained its upward trajectory, as it further rose to 13.71% in the month of September (from 13.22% printed in August).
The northward movement in inflation rate was chiefly due to a jump in Food inflation rate to 16.66% in September (from the 16% printed in August). We believe the spike in food inflation was due to the weak harvest season induced by low planting activity given the restrictions on movements amid Covid-19 pandemic.
Also, the core inflation rate climbed to 10.58% (from 10.52% in August) amid rising in transport, clothing and footwear as well as housing water and electricity amongst others.
The imported food index rose to 16.44% (higher than 16.42% in August) despite the appreciation of the Naira against the USD at most market segments.
Specifically, two months moving average foreign exchange rates at the BDC and Parallel market moderated y-o-y by 1.55% and 1.22% to N457.99/USD and N465.73/USD respectively in Septemeber 2020. Albeit, the interbank foreign exchange market rate depreciated by 0.56% to N381.00/USD.
On a monthly basis, headline inflation rose to 1.48% in September (from 1.34% in August). Notably, monthly food inflation rose to 1.88% in September (from 1.67% in August) as prices of bread, cereals, potatoes, yam and meats, amongst others, increased.
However, Core inflation fell to 0.94% (from 1.05% in August) despite higher clothing and footwear (+1.00%), transportation costs (+1.16%) as well as housing and energy costs (+0.80%).
Meanwhile, urban and rural inflation rates rose to 14.31% and 13.14% (higher than 13.83% and 12.65%) respectively. In another development, the President of the World Bank Group, Mr. David Malpass and the Managing Director of the International Monetary Fund (IMF), Ms Kristalina Georgieva, have hinted on their plan to provide debt reduction for Nigeria and other International Development Association (IDA) countries which were hit by COVID19 pandemic, in order to return them back to the path of economic growth – Nigeria’s Gross Domestic Product (GDP) contracted by 6.10% in Q2 2020.
This was as the IMF boss estimated that the cumulative funding needed
by African countries to cushion the effect of the COVID-19 pandemic hovered around USD1.3 trillion. It mentioned that African countries needed to focus on ambitious reforms that would make them an attractive investment destination even for domestic private capital.
Also, in the bid to see an end to the COVID-19 pandemic and return countries to the path of economic growth, IMF reportedly earmarked about USD12 billion for the purchase and distribution of COVID-19 vaccines, test kits and treatment. On the foreign the scene, WTI crude price rose week-on-week (w-o-w) by 0.12% to USD41.24 a barrel amid a 0.77% w-o-w fall in U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) to 489.11 million barrels (albeit increased by 12.48% from 434.85 million barrels as at October 11, 2019).
This was in spite of a 1.99% w-o-w decline in US crude oil input to refineries to 13.58 mb/d as at October 9, 2020 (and fell by 12.04% from 15.44 mb/d as at October 11, 2019). Elsewhere, Bonny Light rose by 0.22% to USD41.49 a barrel; however, Brent price tanked by 0.42% to USD43.16 a barrel as at Thursday, October 15, 2020.