JUST IN: Rising energy cost, others pressure inflation to 17yr high

Analysts in the financial sector, yesterday, projected a further pressure on inflation rate to 21.5 percent in November 2022 after the National Bureau of Statistics, NBS, yesterday, announced 21.09 per cent for the month of October 2022.

They cited the rising cost of energy and flooding, which affected many food producing states, coupled with the depreciating naira and rising airfare prices.

They expected a moderate Monetary Policy Rate, MPR, hike at the next Monetary Policy Committee meeting by around 25 basis points.

According to the NBS’ Consumer Price Index, CPI, the October 2022 inflation figure which rose by 0.32 percentage point from 20.77 percent recorded in September, represents a 17 year high and 11th consecutive month-on- month increase.

NBS, also stated that food inflation increased to 23.72 percent from 23.34 percent in the corresponding Month last year.

The Bureau attributed the rise in food inflation to an increase in the price of cereals and bread, potatoes, yams, and other food items.

On food inflation, NBS stated: “The food inflation rate in October 2022 was 23.72 percent on a year-on-year basis; which was 5.39 percent higher compared to the rate recorded in October 2021 (18.34 percent).

“The rise in food inflation was caused by increases in prices of bread and cereals, food products n.e.c, potatoes, yams and other tubers, oil and fat.

“On a month-on-month basis, the food inflation rate in October was 1.23 percent, this was a 0.21 percent decline compared to the rate recorded in September 2022 (1.43 percent).

“This decline was attributed to the reduction in prices of some food items like tubers, palm oil, maize, beans, and vegetables.”

Commenting on the development, analyst at CowryAssets Management Plc said:” Our headline inflation outlook remains elevated when we take into account the recent flooding which affected many food producing states; the rise in energy costs which is reflective of the increases in fuel prices (diesel and kerosene) coupled with the depreciating naira and rising airfare prices.

“For the MPC, there is little room for another rate tweak at its next meeting on Monday and Tuesday after an already 400bps rate hike this year in the bid to tame inflationary pressure, following this marginal acceleration.

“Thus, we expect a moderate rate hike at the next MPC meeting by around 25 basis points. That being said, we project headline inflation to hit 21.5 percent in November.”