Headline Inflation Eases Further to 15.98%


The consumer price index (CPI) continued to ease as it moderated for the eighth straight month in September 2017. The CPI eased by 0.03 percent points to 15.98 percent year on year (vs 16.01 percent recorded in July). This in line with our expectation in the last report that inflation would be within the region of 15.95 and 15.98 percent. The Nigerian Bureau of Statistics (NBS) report stated that increases were recorded in all COICOP (Classification of Individual Consumption by Purpose) divisions that contributes to the headline index. 

The Headline index on a month-on-month basis increased by 0.78 percent in September, 0.19 percent points lower than the 0.97 percent month-on-month increase in August.  The urban index inched northwards to 16.18 percent year-on-year in September, 0.05 percent points higher than the 16.13 percent recorded in August, while the rural index declined from August’s 15.91 percent to 15.81 percent in September. Food Prices continued to exert pressure on headline inflation, with highest prices recorded in coffee, tea, cocoa, meat, oil & fats, bread & cereals, vegetables, milk, potatoes & yams, cheese, egg and fish.

Core Sub-Index Eases 

The Core sub index (All Items Less Farm Produce) which adjusts for volatility in agricultural prices eased on a year-on-year basis by 0.10 percentage points. It eased to 12.10 percent in September from 12.30 percent recorded in the preceding month of August. The index also eased further on a month-on-month basis to 0.80 percent in September, lower than the 0.93 percent increase recorded in August. Prices recorded in passenger transport by air, motorcycles, furniture and clothing materials as well as books and stationary, non-durable household goods and shoes exerted pressure on the Core sub-index.

Food Sub-Index inched upwards to 20.32%

The food sub-index went northward as food price pressure continued. The index increased to 20.32 percent year-on-year, 0.07 percent points increase from August’s 20.25 percent rate. The food price pressure was spurred mainly by increase in prices of meat, fish, oil and fats, coffee, tea, cocoa, bread and cereal, milk, cheese, egg, vegetables, potatoes, yams and tubers. The food price index declined on a month-on-month basis, declining from 1.14 percent in August to 0.87 percent in the month of September.


Further easing of inflationary pressure, is consistent with the stability in other core macroeconomic variables such as foreign exchange stability, MPC rate stability, further supported by the marginal improvement in economic growth as recorded in 2017 Q2 GDP report. We expect inflationary pressures to continue easing as the core macroeconomic variables stabilises with the harvest season kicking in to ease food price pressures.

In the investment environment, we do not expect any major alteration in investment patterns. In the equities market, we do not expect any major alteration with Q3 earnings season about to kick off we expect a bullish trend as speculators hunt for bargains in expectation of good earnings numbers. The fixed income space is still desirous for to risk averse investors due to high yields on the assets.

Outlook for Inflation

We expect the trend of modest easing of inflationary pressure to continue over the coming months due to the factors earlier discussed including the harvest season kicking in to soften food price pressure. We expect inflation to ease marginally to 15.95 percent in the month of October.




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