Friday, April 13, 2018 /08:48 AM / FBNQuest
Research
The
latest report from the NBS has headline inflation y/y at 13.3% in March. This
is the fourteenth successive monthly slowdown, and by a healthy 99bps on this
occasion. The driver was a decline in food price inflation from 17.6% to 16.1%
y/y. Core inflation also slowed, from 11.7% to 11.2% y/y. Our expectation,
shared with wire services, was 13.6% y/y for the headline measure.
Food price inflation y/y has now slowed in
large steps for four successive months. This is not a response to the actions
of the monetary policy committee (MPC), which has often noted that supply-side
factors beyond its control were responsible for the stubbornness of food price
inflation.
Imported food price inflation m/m has been
sticky since late last year. Since the CBN’s policies have brought fx rate
stability, we assume that the cause has been the higher US dollar price of the
products.
The bureau also tracks inflation by state,
with the highest 16.4% y/y in Bauchi in March and the lowest 10.3% in Kwara.
However, it cautions that household baskets vary across states.
We see the headline rate falling again to
12.5% y/y in April. Base effects will be positive through to June/July, when we
see the rate at or a little below 11.0%.
The MPC next meets after the release of the
April report. We jumped the gun ahead of the meeting earlier this month in
calling for easing but next time around, if our forecast for April is
reasonably accurate, we would expect a rate cut of up to 100bps.

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