Tuesday, December 19,
2017 8:57AM / FBNQuest
inflation report from the NBS shows headline inflation y/y at 15.9% in
November. This was the tenth successive slowdown, albeit by just 1bp on this
occasion. Our expectation, shared with wire service polls of analysts, was
15.8% y/y. The core inflation increased to 12.2% from 12.1% recorded in October
while food price inflation barely moved in the month, at 20.3% y/y.
The m/m increase
in the headline inflation increased marginally by 0.78% in November compared
with 0.76% recorded in the previous month. This represents the first rise in
m/m inflation following five consecutive declines recorded since May 2017.
Although a rise was recorded, m/m inflation remains below 1.0%, which still
points towards some level of price moderation.
y/y increase recorded in core inflation could be loosely linked to seasonal
effects – that is, a surge in demand given the festive period against limited
imported food prices, there was a y/y pickup in November to 15.8% from 15.3%
recorded in the previous month. However, on a m/m basis, it slowed marginally
to 1.2% from 1.3% in October. Given the stability of the fx rate in the various
windows in recent months, the y/y increase probably reflects a rise in the
dollar price of individual food commodities. NAFEX turnover amounted to
US$5.7bn in November according to FMDQ.
At its last meeting, the MPC noted the significant contribution of food
prices to headline inflation and observed that the benefit of base effects on overall
headline inflation had substantially reduced.
We see an unchanged headline inflation rate at 15.9%