CPI Report: Slow but Steady Rise in Consumer Prices

The April 2020 Consumer Price Index report published this week showed an 8bps uptick in headline inflation to 12.34% Y-o-Y from 12.26% in March 2020, the highest since April 2018. We attribute the marginal increase to weak economic activity. We note the increase in double-digit core inflation at 10.0% from 9.7% in March 2020, the highest since April 2018. Likewise, food inflation was marginally higher at 15.03% from 14.98% respectively. This is despite the planting season and the disruption to the agriculture value chain in Nigeria due to COVID-19.

Overall, there was rising pressure on consumer prices in April as headline and food inflation rose to 1.0% and 1.2% M-o-M from 0.8% and 0.9% respectively, the highest since November 2019. Similarly, core inflation rose 0.9% M-o-M from 0.8% in the previous month the highest since June 2018.

Looking ahead, we expect that the gradual easing of lockdown measures as well as the commencement of planting activities would drive a faster increase in domestic consumer prices. Thus, we anticipate subsequent inflation figures to more reflect the impact of the trade restrictions, exchange rate weakening and the recent VAT increase.