18, 2017 9:27AM / FBNQuest Research
latest inflation report from the NBS shows headline inflation y/y at 16.0% in
September: this was the eighth successive slowdown, albeit by just 3bps on this
occasion. Our expectation, shared with wire service polls of analysts, was an
uptick to 16.3% y/y. Core inflation slowed from 12.3% in August to 12.1% y/y
while food price inflation was 7bps higher at 20.3% y/y.
Policymakers will note that the m/m rate for all three measures declined
in September for the third month in succession: by 19bps for the headline
measure, by 13bps for core inflation and by 27bps for food prices. They can
therefore conclude that there is a movement towards general price stability.
The CBN’s reference range for the headline rate, for what it is worth,
is a y/y target of between 6.0% and 9.0%. We do not see the attainment of this
range before 2019.
For imported food prices September brought both m/m and y/y increases.
Given the stability of the fx rate in the various windows in recent months, the
first probably reflected rises in the dollar price of individual food
As for the stance of the monetary policy committee (MPC), the communique
after its meeting in late September noted several reasons for stubbornly high
food price inflation including a weak harvest. The MPC also indicated that it
did not anticipate significant gains on GDP growth (higher) and inflation
(lower) much before Q1 2018.
We see the headline rate at 15.9% in October.