The NBS released its April CPI report today. In line with expectations, consumer price inflation rose by 0.9% to 16.82%. This is the 3rd consecutive monthly increase and the highest inflaton level in almost three quarters. Even though analysts had anticipated another increase, the magnitude of the increase was much higher than anticipated.
Unlike in the month of March, prices increased across both the food and non-food baskets. This is due to the surge in the price of diesel, which is the most widely used fuel for power generation and logistics. The effects of the spike in diesel prices has spilled over into sectors such as power generation, transportation, and communication. Diesel is currently being sold at N650/litre, 209.5% higher than a year ago. It is important to note that the continued payment of petrol subsidy is limiting the full impact of rising global energy prices on domestic inflation.
The probability of monetary tightening has become infinitely more likely. If the CBN were to hike rates at its next MPC meeting it would not be an outlier. This is because most apex banks in both advanced and emerging economies (including Sub-saharan Africa) have begun another cycle of aggressive tightening and increase in interest rates to dampen inflation.
In the download and link below, the FDC Think Tank shares its thoughts on the impact of April’s inflation numbers on the economy.
Enjoy your read…