Dear Subscriber,

For the first time in 18 months, Nigeria’s headline inflation bucked the declining trend, increasing to 11.23% in August from 11.14% in July. This implies that the base year effects have finally waned and macroeconomic conditions are normalizing. The major factor responsible for the rise is food inflation (13.16%). The increase in food inflation is mainly due to disruptions in the food belt in North Central Nigeria. This is validated by the 0.2% drop in core inflation which measures inflation less seasonal factors.

The month-on-month inflation dipped to 1.05% (13.38% annualized), supported by the marginal decline in core inflation.

The reversal in the inflation trend and the pressure on external reserves will embolden the hawks in the MPC, who are calling for another cycle of tightening.

In the attached bulletin, the FDC Think-Tank analyses the inflation numbers for August.

Do enjoy your read…