Inflation Report – June 2020


The National Bureau of Statistic (NBS) published the consumer price index (CPI) report for June 2020, which showed inflationary pressure intensified in the months with 16bps increased from the previous month as food prices surged. Nigeria’s headline inflation rose to 12.56% y/y in June from 12.40% y/y recorded in May. It was the highest rate since March of 2018. The uptick in the headline figure was largely driven by food inflation, which increased by 15.18% y/y compared to the 15.04% y/y recorded in May. This rise in the food inflation was caused by the increases in prices of bread and Cereals, potatoes, yam and other tubers, fruit, oils and fats, meat and vegetable. This is consistent with seasonal trends during the agricultural planting season and also the disruptions in the supply of products as farming activities are yet to recover from the impact of the nationwide lockdown and movement restrictions caused by Covid-19.

Core Inflation up marginally by 1basis point

Core inflation (removes volatile goods from the basket of commodities tracking headline inflation) was largely unchanged at 10.13% y/y (+1bps), although transportation costs continued to rise by 10.41% y/y in June from 10.09% YoY in May, the reason for this might be as a result of the recent increased in pump price of petrol to N143.8 per liter by the petroleum product regulatory agency (PPRA). Other factors that may have push the transportation cost higher is the ‘social distancing protocol recommended for public transport, which has led to transport operators adjusting their prices upward. 

Inflation Outlook

The risks to inflation are tilted to the upside as increase in inflation that lags the recent NGN depreciation (Official – N381 and Parallel – N460) is probable especially given supply chain and transportation challenges disruptions by the impact of Covid-19. With the gradual re-opening of the Nigerian borders and farmers returning to farms after the lockdown the rise in inflation may be tempered.

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