Inflation Rate Expected To Nudge Further To 16.98% For February – Expert

…consumer Prices Expected to Remain Elevated

In February 2021, consumer prices (inflation rate) are expected to climb by 16.98% YoY (vs. 16.47% YoY reported in January 2021)

In January 2021, domestic inflation continued its climb, reaching 16.47% YoY at the end of the month. The food and core indices both contributed to this uptrend and have shown no signs of letting up. In February, we note that while post-harvest supplies of key food items like cereals, yam, and other tubers were expected to moderate demand pressures, heightened supply chain bottlenecks and insecurity issues in the food-producing regions posed significant threats to food supply.

In particular, we point to the Shasha crisis which occurred in Oyo state, as well as the strike action by the Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN) around mid-February, which triggered a diversion of food supply away from the South to neighbouring countries.

On the other hand, we attribute the rising prices of non-food items to higher transport (exacerbated by artificial scarcity which pushed pump prices of petrol slightly higher) and healthcare services costs. In addition to these, the FX devaluation in the I&E window to NGN410/USD (vs prev. NGN400/USD) in February and a corresponding movement in the parallel market rate to NGN475/USD also played their part. In sum, we expect consumer prices to rise by 16.98% YoY in February.

MERISTEM RESEARCH