The National Bureau of Statistics (NBS) released the inflation data for the month of January 2022, which showed Nigeria’s inflation rate reversed its direction, dropped slightly to 15.60% YoY (by +3bps from 15.63% recorded in December 2021). Also, the Headline index increased to 1.47% MoM in January 2022 (by -34bps from 1.82% recorded in December 2021).
Similarly, food inflation, the main driver of the headline inflation, declined to 17.13% YoY (by -24bps from 17.37% recorded in December 2021). According to the report, the rise in the food index was caused by increases in prices of prices of food products, such as coffee, tea and cocoa, milk, cheese and eggs, bread and cereals, vegetables and potatoes, yam and other tubers.
Meanwhile, core inflation which excludes prices of farm produce remained flat at 13.87% YoY (same as the 13.87% recorded in December 2021). The uptick was driven by an increase in the price of gas, fuel, and lubricants for personal transport equipment, vehicle spare parts, non-durable household goods, solid fuel, passenger transport by road, passenger transport by air, garments, cleaning, repair and hire of clothing, major household appliances whether electric or not, wine, clothing materials, other articles of clothing and clothing accessories and liquid fuel.
Looking into the month of February, we anticipate further moderation, however, we expect the high base effect to dissipate between March and April 2022.
Consequently, we expect headline inflation to decline by 25bps to 15.35% YoY for February 2022.