Dear All,
The National Bureau of Statistics (NBS) reported an increase in headline inflation for February 2023 to 21.91% YoY (vs. 21.82% YoY in January 2023), 3bps above our projection of 21.88% YoY. The uptick in headline inflation was mainly driven by the food index which edged higher by 24.35% YoY (vs. 24.32% YoY in January 2023). Price increments on food items like bread, cereals, oil and fat, potatoes, yam and other tubers, fish, fruits, meat, and vegetables spurred the increase in the food inflation rate. Conversely, movement in the core index moderated for the first time since April 2022 to 18.84% YoY (vs. 19.16% YoY in January 2023) mainly driven by increases in the prices of gas, air transportation fare, liquid and solid fuels, vehicle spare parts, among others. On a monthly basis, both the food and core inflation slowed down to 1.90% MoM and 1.06% MoM (vs. 2.08% MoM and 1.82% MoM in January 2023), respectively. We expect the sustained uptrend in headline inflation as well as the current cash crunch and its effect on the economy to be a key consideration for the Monetary Policy Committee at its upcoming meeting. Hence, we anticipate a (at least) 50bps hike in the Monetary Policy Rate (MPR).
Kindly find attached the full report.
