Headline Inflation Climbed Higher in October, Up by 14.23%


Wednesday, November 18, 2020  / 10:43AM / By PFI Capital / Header Image Credit: Brandspur


The National Bureau of Statistics (NBS) released Consumer Price Index (CPI) data earlier today with headline inflation increasing by 14.23% (year-on-year). This represent a 52bps higher than the rate recorded in September (13.71%) marking  the  14 months consecutive increase in inflation level since August 2019. 


Similarly, the Headline index increased by 1.54% (month-on-month) in October 2020 indicating 0.06% rate higher than the rate recorded in September 2020 (1.48%) The percentage change in the average composite CPI for the twelve months period ending October 2020 over the average of the CPI for the previous twelve months period was 12.66%, showing a 0.22% point from 12.44% recorded in October 2020. 


Food Inflation index tick higher continuously  

Upward pressure in the prices of bread and cereals, potatoes, fish, fruits, alcoholic and beverages, yam among other tubers drove the composite food index upward by 17.38% compared to the 16.66% recorded in September 2020. Notably,  food sub-index increased by 1.96% on month-on-month basis indicating an 0.08% points higher than the 1.88% in September. 


However, core inflation which excludes the prices of volatile agricultural produce advanced by 11.14% (year-on-year) indicating an 0.56% increase when compared to the 10.58% in September.  

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Structural and COVID-19 Induced Impact on High Prices 

Largely, Nigerian economy inflation remains driven by structural supply side factors ranging from weaker exchange rate pass-through on the Core basket and Imported Food index to hike in PMS and electricity prices. Equally, disruption to the planting season earlier this year as a result of COVID-19  serves a major factor driving the food inflation sub index.  


On the policy stance of the government, the current monetary policy drive of the CBN which appears to have given up the objective of price stability for an "induced" FX stability and stimulating GDP growth through various development financing remain a pull to the high level of system liquidity  driving  yield continuously lower with resulting effect on demand pull inflation. However, with  this policy mounting opportunity cost of higher domestic prices and tepid FX inflow due to fall in oil price, a deeper look at its  broad impact  on the GDP recovery from COVID-19 and employment level  would be a major focus of the MPC in their next meeting on whether to stimulate the economy further via lower MPR while accommodating higher inflation with continuous negative real yield. 


Inflation Outlook for the Month of November 

With lingering factors such as the sustained border closure,  the implementation of the new electricity tariff and  spike in the PMS pump price by the Petroleum regulators in the downstream sector,  we expect further upward pressure across all inflation sub index for the month of November with more weight towards the food inflation as festive season approaches.

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Previous Report from PFI Capital 

1.      August PMI Shows Economic Activities Still in Contraction Amid Slow Recovery - PFI Capital 

2.     Nigeria Nears Recession with 6.1% Contraction in Q2-2020 - PFI Capital 

3.     Food Price Pressure Stokes Inflation to 28-month High in July - PFI Capital 

4.     Unemployment Heads for New-High - PFI Capital Limited 

5.     Nigeria's COVID-19 Induced Foreign Trade Decline - PFI Capital 

6.     Inflationary Pressure Likely to Decelerate in July - PFI Capital Limited 

7.     Implications of CBN's Exchange Rate Unification - PFI Capital Limited 

8.     Nigeria's Debt Profile on a Rise - PFI Capital Limited 

9.     A More than Expected Slowdown in Global Growth - PFI Capital 

10.  Nigeria's Double-Whammy: Inflation and Unemployment - PFI Capital 

11.   Performance Review of the Economic Recovery and Growth Plan - PFI Capital 

12.  Implications of Nigeria's Consumption Expenditure Pattern - PFI Capital Limited 

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Related News 

1.     October Inflation: A Blip or Trend? 

2.     Nigeria's Inflation Maintains Upward Trend Amidst Structural Rigidities 

3.     Headline Inflation Increases By 14.23% YoY In October 2020, 0.52% Higher Than September 2020 Rate 

4.     Persisting Food Pressure Pushes Headline Inflation to 13.71% YoY 

5.     Headline Inflation Increases By 13.71% YoY In September 2020, 0.49% Higher Than August 2020 Rate 

6.     Inflationary Pressure Still Squeezing Pockets 

7.     Headline Inflation to Remain Stubbornly High in Q4'20 

8.     Headline Inflation Climbed to a 29-month High of 13.22% in August 2020 

9.     Headline Inflation Increases By 13.22% YoY In August 2020; 0.40% Higher Than July 2020 Rate 

10.  Headline Inflation to Creep Up to 12.95% 

11.   Food Price Pressure Stokes Inflation to 28-month High in July - PFI Capital 

12.  Headline Rate Will Remain Unchanged at 12.8% YoY in August 2020 - FBNQuest 

13.  Headline Inflation Increases By 12.82% YoY In July 2020; 0.26% Higher Than June 2020 Rate 

14.  Headline Inflation Fast Approaching the 13.0% Threshold Due to Cost Push Factors 

15.  Inflationary Pressure Likely to Decelerate in July - PFI Capital Limited 

16.  Headline Inflation Crosses the 12.5% Threshold in June 2020 

17.  Inflation Spikes Amid Rising Coronavirus Cases; Understanding The Numbers 

18.  Headline Inflation Increases By 12.56% YoY In June 2020; 0.16% Higher Than May 2020 Rate 

19.  Headline Inflation to Increase to 12.55%, Monthly Inflation to Dip in June 2020 

20. Headline Inflation Inched Up By 0.06% As Monthly Inflation Spikes 


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