The December inflation report was released yesterday and contrary to our projections (14.9%), headline inflation bucked its 8-month declining trend, rising by 0.23% to 15.63% from 15.4%. The data partially addresses the recent controversy surrounding the contrarian direction of inflation in Nigeria.
Most of the sub-indices also increased especially core inflation, which spiked to 13.87% and food inflation, which climbed to 17.37%. Prices of the usual suspects (bread, cereals, yam and other tubers) increased. Equally disturbing to policy makers will be the fact that food inflation rose in the midst of the harvest https://levitralab.com season. Imported inflation also played a major role in pushing prices in the opposite direction.
All eyes on the MPC meeting next week
Most analysts were of the view that the CBN’s MPC will maintain status quo again next week in view of the earlier anticipated declining inflation. The new data now increases the probability of a tightening even though remote at this time. The CBN had maintained status quo 25 times in the last 28 meetings.
In the download, the FDC Think Tank shares its thoughts on the impact of December’s inflation numbers on the economy.
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