‘Headline inflation moderates on Y-o-Y basis for the 17th month at 11.23% in June’
The National Bureau of Statistics (NBS) on Monday, released its CPI and Inflation report for the month of June 2018, revealing that Nigeria’s headline inflation rate moderated on a year-on-year basis for the seventeenth consecutive month to 11.23%, from 11.61% in May.
But experts at Codros Capital came up with a number of instructive takeaways, including:
That the continued weakening of the mechanical impact of the well-known base effects. It is good to note that the pace of moderation (38 bps) recorded in June, relative to May, was the slowest since February 2018 and stood at a significant discount to the average deceleration rate of 75 bps achieved thus far this year.
-The strong increase in month-on-month headline inflation rate at 1.24%. Dissecting that number, the group said the highest m/m inflation rate posted in the last twelve months. Apart from that, the rate is equally higher, by 39 bps and 4 bps respectively, than the average m/m rates recorded in H2-17 (0.85%) and 2017FY (1.20%).
-The consistent downtrend and uptrend of y/y and m/m numbers respectively for the headline index and its food and core components.
-The ubiquitous nature of the m/m upward trajectory across the entire CPI basket.
-Monetary Policy Committee meeting: Further justification to maintain status quo
Besides, the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) commenced its third meeting of the year on Monday and will communicate its decisions today, Tuesday, 24th July, 2018.
Drawing on prevailing realities and insights from the last meeting in May, analysts expect members of the Committee will find the case for maintaining status quo most compelling. We would like to reiterate the MPC’s shift from a potential rate cut to a more proactive view of inflation, amid upside risks to liquidity injection over H2-18.
