The Consumer Price Index (CPI), which measures inflation according to the Nigerian Bureau of Statistics rose by 15.99% Year-on-Year (YoY) in Oct’21. This is 0.64% lower than the rate recorded in Sept’21 (16.63%). The headline inflation rate eased for a seventh consecutive month as both food inflation and core inflation rose lower than the previous month.
Also, on a month-on-month (MoM) basis, the Headline Index increased by 0.98% in Oct’21, this is 0.17% lower than the rate (1.15%) recorded in the previous month. With both food and core subindices on the downtrend, monthly headline inflation declined.
In a report released by the statistics office, the rise in the food index was caused by increases in the prices of food products, such as coffee, tea and cocoa, milk, cheese, egg bread and cereals, vegetables and potatoes, yam and other tubers.
The Food Inflation
The Food sub-index inched up by 18.34% YoY in Oct’21 compared to 19.57% in Sept’21. Similarly, on an MoM basis, the food inflation increased by 0.91% in Oct’21, down by 0.35% from 1.26% recorded in Sept’21.
The rise in the food sub-index was caused by increases in the price of coffee, tea and cocoa, oils and fats, milk, cheese and eggs, bread and cereals, vegetables and potatoes, yam and other tuber.
The Core Inflation/ The All Items Less Farm Produce
The “All Items less farm produce” or “Core Inflation”, which excludes the prices of volatile agricultural produce stood at 13.24% YoY in Oct’21, declined by 0.50% when compared with 13.74% recorded in Sept’21. Also, on a MoM basis, the core sub-index increased by 0.80% in Oct’21, shed 0.44% when compared with 1.24% recorded in Sept’21.
The highest increases were recorded in price of gas, fuels and lubricants for personal transport equipment, vehicle spare parts, non-durable household goods, solid fuel, passenger transport by road and air, garments cleaning, clothing materials and accessories, liquid fuel among others.
The yearly and monthly headline, food and core inflation rates rose at a slower rate in the review month, as the impact of high base effect persists. While the food subindex closed lower majorly on the back of the main harvest season in both the North and South, the core subindex drew support from easing FX pressures due to improved supply as well as some supply chain normalisation.
Despite the improvement seen in both monthly and yearly rates, several inflationary drivers still remain active (which include the surge in the price of cooking gas and diesel, limited access to FX through official channels, low harvest volumes, chronic supply chain bottlenecks etc.), we expect disinflation to persist in the short term, as the high base effect on inflation will likely become more prominent in the coming month and towards the year end.