Wednesday, June 135, 2016 9:26AM /FBNQuest Research
The latest shocking inflation report from the NBS shows an acceleration in the headline rate to 15.6% y/y in May from 13.7% the previous month. This compares with the average forecast of 14.7% y/y in a wire service poll of analysts, and our own contribution, based on positive base effects, of 14.1%.
There were sharp increases for both the core and food measures to 15.1% y/y and 14.9% y/y from 13.4% and 13.2% respectively. The m/m headline rate was the highest since January 2012 when the FGN last sought to deregulate fuel prices.
The category for housing, water, electricity, gas and other fuels surged by 22.0% y/y in May.
We detect another inflationary push in the NBS comment that it saw “a drawdown of inventories across the country”.
The fx impact is discernible in the fact that the y/y rise in the urban index in May was running over four percentage points ahead of its rural equivalent.
It is clear that, with or without a more flexible exchange-rate policy, there will be another steep rise in inflation in June.
Our more observant readers will have noticed that the headline rate y/y in May was higher than that of its constituent parts (non-food and food).
We have therefore to spell out the NBS health warning that processed food stuffs are elements of both parts. Imported food inflation surged to 18.6% y/y in May from 16.4% the previous month.