Dear Subscriber,
Nigeria announced its official inflation for April today as scheduled. As widely anticipated, headline inflation rose by 0.18% to 22.22%. The increase in inflation was mainly due to a surge in the food basket to 24.61% from 24.45% in March. At this level, headline inflation, which has now increased for the 4th consecutive month is at 18-year high.
The inflationary trend in Nigeria is consistent with both the global and regional direction. The commodities that witnessed the highest spikes are tomatoes, yam and other tubers. A basket of tomatoes jumped by 100% to N70,000 from N35,000 in March.
Monetary policy during a handover
There are two major uncertainties that have been impacting inflation expectations & psychology in the past few months. These are the price of diesel and the temporary appreciation of the Naira in the forex market. In April, the price of diesel fell by 35% to N640/litre while the Naira appreciated by 1.33% to N740/$ in the parallel market. The pass-through effect on domestic prices has been relatively muted. This is because according to Keynes, prices are usually sticky downwards.
The MPC meets next week for the last time in this administration and expectations are for a 25 basis points increase in the monetary policy rate (MPR), in line with most other Central banks.
In the download, the FDC Think Tank analyzes the April inflation numbers and their impact on businesses and the economy.
Do enjoy your read…
