FDC ECONOMIC BULLETIN – APRIL 19, 2022 (Re: Nigeria’s headline inflation surges to 15.92% ahead of Easter and Ramadan celebrations)

Dear Subscriber,

The NBS released its CPI report for March last week, and as widely anticipated, headline inflation increased for the 2nd consecutive month to 15.92% from 15.7% in February. The spike in inflation was predominantly driven by higher food costs, evidenced by the 0.09% increase in food inflation to 17.20%. Increased aggregate demand (Easter and Ramadan celebrations) amid lower supply (planting season effects), pushed up food prices.

Surprisingly, core inflation (inflation less seasonalities) fell by 10bps to 13.91%, suggesting that the pass-through effects of higher diesel prices on logistics costs are beginning to wane.

African Countries Battle Rising Inflation & High Debt Levels

Like most other African countries, Nigeria is battling rising inflation and high debt levels. The surge in inflation is forcing policy makers to become more aggressive in their monetary policy stance. The most recent in Africa is the Bank of Ghana, which increased its policy rate by 250bps and South Africa Reserve Bank, which raised its interest rates by 25bps. The Nigerian MPC will meet again in May to decide on the monetary policy direction. The consensus forecast is for a 50bps increase in MPR to 12.5%pa. Higher interest rates will push up debt service costs for debt stricken African countries like Nigeria. Several African countries are already under debt distress or are dangerously close to it.

In the download and link below, the FDC Think Tank shares its thoughts on the impact of March’s inflation numbers on the economy.

Enjoy your read…