Analysts See Nigeria’s Headline Inflation Rate Fall to 12.5% YoY in April

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A towel with a print of the Nigerian naira is displayed for sale at a street market in the central business district in Nigeria's commercial capital Lagos February 4, 2016. Picture taken February 4, 2016. REUTERS/Akintunde Akinleye/File - RTSJQR1
The latest report from the NBS has headline inflation y/y at 13.3% in March. This is the fourteenth successive monthly slowdown, and by a healthy 99bps on this occasion. The driver was a decline in food price inflation from 17.6% to 16.1% y/y. Core inflation also slowed, from 11.7% to 11.2% y/y. Our expectation, shared with wire services, was 13.6% y/y for the headline measure.  
Food price inflation y/y has now slowed in large steps for four successive months. This is not a response to the actions of the monetary policy committee (MPC), which has often noted that supply-side factors beyond its control were responsible for the stubbornness of food price inflation.
Imported food price inflation m/m has been sticky since late last year. Since the CBN’s policies have brought fx rate stability, we assume that the cause has been the higher US dollar price of the products.
 
The bureau also tracks inflation by state, with the highest 16.4% y/y in Bauchi in March and the lowest 10.3% in Kwara. However, it cautions that household baskets vary across states.
 
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We see the headline rate falling again to 12.5% y/y in April. Base effects will be positive through to June/July, when we see the rate at or a little below 11.0%.
The MPC next meets after the release of the April report. We jumped the gun ahead of the meeting earlier this month in calling for easing but next time around, if our forecast for April is reasonably accurate, we would expect a rate cut of up to 100bps.
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Godwin Okafor is a financial journalist, Internet Social Entrepreneur and the Founder Naija247news Media Ltd He has over 16 experiences in journalism, which cuts across traditional and digital media. He started his journalism career in Business Day, Where he was a senior editorial graphic artist, before he left to start Naija247news, An Online Financial Newspaper in 2010. He has won series of awards and he is the chairman of Emmerich Resources Limited, the publisher of Naija247news.com and also sits on the board of Students In Business Awards, (SIBA).

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