Dear Subscriber,

The NBS published its official inflation numbers today. As forecast by FDC Think Tank, Nigeria’s headline inflation rate jumped to 29.90% from 28.20%. This rise is due to a combination of factors including a weaker naira, high diesel prices, cost of logistics, and the cross-elasticity effect on domestic commodities (substitutes). Also notable is the amplified Inflation expectations of consumers which have risen significantly compared to prior months.

Food inflation surged by 1.48% to a record high of 35.41% especially the prices of cereals, yams, fruits, fish, meat, potatoes, vegetables, and eggs experiencing the largest price hikes. Core inflation rose by 0.52% to 23.59% from 23.07%. The highest price hikes were observed in the cost of transportation both by road and air.

MPR likely to raise policy rate by 200bps

The monetary policy meeting (MPC) is scheduled for February 26 and 27. In view of the foregoing, the MPC is expected to maintain its hawkish stance in a bid to rein inflationary pressure. Analysts posit the likelihood of MPC raising the policy rate by at least 200 basis points (bps) to 20.75%p.a. from the current rate of 18.75%p.a.  In the past, an increase in the policy rate has not affected the general rate but this time it may likely do.

The FDC Think Tank analyzed the January inflation data and its implications for businesses and the economy in the download and link below.

Enjoy your read!