Dear Subscriber,

NBS is set to release its latest inflation numbers on September 15. Based on our econometric model estimation, our findings suggest there would be a further decline in headline inflation to 32.46% from 33.40% in August. The price decline is reflective of extraordinary developments in August. These include but are not limited to the #Endbadgovernance protests and petrol scarcity. That notwithstanding, there is the base year effect of the 2023 period. In August last year, we witnessed a significant increase in prices. In comparing prices between two periods, the higher the base year level, the lower the percentage increase in the current year. Hence, the anticipated decline can be primarily attributed to the base effect and harvest season.

It Is noteworthy that food inflation reached a peak of 40.9% before decelerating to 39.53% and is projected to decline further to 38.40%. As food inflation is tapering, core inflation is moving in the opposite direction, rising to 27.62% from 27.47%. Core inflation is more structural than transient while food inflation responds to harvest and seasonalities.  Month-on-month (m/m) inflation rate is likely to increase marginally to 2.44% (annualized at 33.69%).

However, the excitement that inflation is tapering may be short-lived given the recent 50% increase in PMS pump price with its knock-on effect on all other prices.

In the download and link below, the FDC Think Tank projects August inflation numbers and their impact on businesses and the economy.

Enjoy your read!