Dear Subscriber,

In the last decade, inflation has declined in January due to the typical post-festive lull.  However, January 2023, broke the trend as headline inflation climbed to 21.8%—the highest level since 2005. The stocking factors (usual suspects)—cash crunch, exchange rate pressures, high energy costs, money supply growth, and election spending—are as trivial as the economic dissonance they’ve wrought on all economic agents. Consumer disposable income is down, investor confidence is falling and policymakers are stuck between a rock and hard place.

All sub-indices increased on an annual and monthly basis. Food inflation rose to 24.32%, core inflation to 19.16%, and month-on-month inflation to 1.87%. We expect this jump in inflation to be a major consideration for the MPC at its next meeting in March. Until then, inflationary pressures will remain high amid the current cash squeeze, lingering fuel scarcity, high transport, and logistics costs, money supply growth, and election spending—all of which will keep eroding consumer disposable income, dwindling investor confidence, and stifling economic growth.

In the download and link below, the FDC Think Tank shares its analysis of the January inflation numbers and their impact on the economy.

Enjoy your read…