Inflation numbers are out for Nigeria and the base effect is kicking in, according to a report by Stanbic IBTC Stockbrokers. This simply means that the headline CPI has declined on year on year basis representing the effects of slower rises in already high food and non-food prices and favorable base effects over 2016 prices.
1st decline in 15 months
The Consumer Price Index (CPI) which measures inflation increased by 17.78 percent (year-on-year) albeit at a slower pace in February 2017, 0.94 percent points lower from the rate recorded in January (18.72) percent. This represents the first time in 15 months that the headline CPI has declined on year on year basis. On a month-on-month basis, the Headline index increased by 1.49 percent in February 2017, 0.48 percent points higher from the rate of 1.01 percent recorded in January.
The Food Index increased by 18.53 percent (year-on-year) in February, up by 0.71 percent points from rate recorded in January (17.82) percent driven by increases in the prices of bread, cereals, meat, fish, potatoes, yams and other tubers and wine, while the slowest increase in food prices year on year were recorded by Soft Drinks, Coffee, Tea and Cocoa. During the month, the highest year on year increases were seen in electricity, Liquid and solid fuels, Fuels and lubricants for personal transport equipment, Clothing materials, other articles of clothing and clothing accessories and book and stationaries
Inflations numbers as it compares to our expectations
Nigeria’s inflation is expected to slow to 17.5% y/y in Feb from 18.7% y/y in Jan. We see a peak in headline inflation during Q1, followed by a deceleration in Q2 led by favorable base effects. Inflation will print a 12% handle in Q3 before rebounding moderately to around 13.5% y/y by the end of the year.
