Article Summary

  • Headline inflation increased to 22.22% in April, driven by food and core inflation.
  • Food inflation increased to 24.61%, while core inflation rose to 20.14%, the highest in almost two decades.
  • The Central Bank of Nigeria has maintained a hawkish stance, hiking its key interest rate to 18% in response to continued price pressures and a weakening Naira.

Headline inflation maintained its upward trend in April albeit at a moderate pace, increasing to 22.22%, which is 18bps higher than the 22.04% recorded in March.

Month-on-month, headline inflation was up by 18bps to 1.91% in April from 1.86% in March and was up by 539bps compared to the rate recorded in April 2022 which was 16.83%. Headline inflation numbers were driven by an increase in both food and core inflation.

The Central Bank of Nigeria (CBN) has maintained a hawkish stance to stem inflation, but the numbers remain sticky. The CBN hiked its key interest rate to 18% in March, a cumulative 650bps rate hike since May 2022 in response to the continued price pressures and a weakening Naira.

Food inflation, a major driver of headline inflation, increased to 24.61% in April from 24.45% in March. On a month-on-month basis, the food basket grew to 2.13% compared to 2.07% in March.

According to the Nigerian Bureau of Statistics (NBS), the rise in food inflation was attributed to an increase in prices of staples like oil and fat, bread and cereals, potatoes, yam and other tubers, fish, fruits, meat, vegetables, and spirits.

Core inflation, which excludes the prices of volatile agricultural produce crossed a 20% threshold for the first time since May 2004, rose by 28bps to 20.14% in April from 19.86% in March. Month-on-month, the core basket grew by 1.46% in April compared with 1.84% recorded in March. The highest increases were recorded in the prices of gas, passenger transport by air, liquid fuel, fuels, and lubricants for personal transport equipment, vehicles spare parts, solid fuel, etc.

Looking ahead, we retain our view that inflation may start to moderate in the second half of the year largely due to base effect and the commencement of the harvest season later in the second half of year. That said, we still have our eyes on some possible price triggers such as the elimination of petrol subsidies.

Headline, Food and Core Inflation (L2Y)

Headline Inflation reached 18-Year High of 22.22% in April