According to official data released by the National Bureau of Statistics (NBS), consumer inflation quickened to a four-month high of 11.24% y/y in September (August: 11.02% y/y), driven by accelerating food and core inflation.
Within the index, prices in the food segment accelerated by 13.51% y/y in September compared with 13.17% y/y in August. In recent months, food prices have come under pressure following the border closure and have continued to sustain the upward pressure on the prices of cereals, vegetables, and meat.
Similarly, core inflation rose to 8.94% y/y from 8.68% y/y over the same period. Across the core sub-indices, the utilities segment (water, electricity, gas and other fuel) witnessed the most pressure as it rose by 16bps to 7.42% y/y from 7.26% y/y in August.
Pass through of fuel prices largely led to pricing pressures with broad-based upward movement recorded across the other core sub-indices, especially across the transport, health, recreation, and miscellaneous segments.
In our opinion, inflation could pick up further in the coming months as the total closure of the border triggers a demand-driven rise in consumer prices. A persistent rise in prices, beyond the CBN’s 6%-9% target, will support a neutral monetary policy stance at the November meeting.