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Food prices push September inflation to 11.28%

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… concern heightens over inflation edging away from CBN’s 6-9% target- Analyst

By Emmanuel Elebeke, Prince Okafor & Elizabeth Adegbesan

THE Consumer Price Index (CPI), which measures inflation rate, rose for the second consecutive month to 11.28 percent Year-on-Year, YoY in September 2018, attributable to food price increases.

The National Bureau of Statistics (NBS) yesterday, stated that headline inflation rose by 0.05 basis point to 11.28 percent in September from 11.23 percent in August while on  Month on Month, MoM basis it declined by 0.21 basis point to 0.84 percent in September from 1.05 percent in August.

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The bureau stated that food sub-index declined by 0.42 basis point in September to 1.00 percent on a  MoM basis while it increased YoY by 0.15 basis point to 13.31 percent in September from 13.16 percent in August.

Food prices

Foodstuff prices 

The NBS said: “The composite food index rose by 13.31percent in September2018 compared to 13.16 percent in August 2018. This rise in the food index was caused by increases in prices of Potatoes, yams and other tubers, vegetables, fruits, meat, milk, cheese and egg, Bread and cereals, and Fish.”

On month-on-month basis, the bureau noted that the food sub-index increased by 1.00 percent in September 2018, down by 0.42 percent points from 1.42 percent recorded in August. “The average annual rate of change of the Food sub-index for the twelve-month period ending September 2018 over the previous twelve-month average was 15.92 percent, 0.58 percent points from the average annual rate of change recorded in August (16.50) percent.”

‘’All items less farm produce’’ or Core inflation, which excludes the prices of volatile agricultural produce stood at 9.8 percent in September2018, down by 0.2 percent from the rate recorded in August 2018 (10.0) percent.”

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Meanwhile, states with the highest YoY food inflation in September were Kwara (17.17 percent), Bayelsa (16.62 percent) and Abuja (15.7 percent), while Plateau (8.82 percent), Abia (10.1 percent) and Ogun (11.1 percent) recorded the slowest rise in food inflation.

Others are Kwara (3.39 percent), Adamawa (2.59 percent) and Kebbi (2.23 percent) had the highest MoM rise in food inflation, while Katsina, Kogi, Nasarawa, Niger and Plateau recorded food price deflation (general decrease in the general price level of goods and services) in September 2018.

Commenting on the inflation report, Research Analyst at FXTM, Lukman Otunuga, said: “Will inflationary pressures make an unwelcome return in Nigeria during the final trading quarter? This was the question on the minds of many investors after inflation rose marginally 11.28% YoY in September from 11.23% the previous month.

“With consumer prices rising for the second consecutive month after 18 months of steady declines, concerns may heighten over inflation edging away from the Central Bank of Nigeria’s 6-9% target.

“Market expectations over an interest rate cut anytime soon are likely to diminish further following today’s inflation report. The combination of rising inflation, uncertainty ahead of the 2019 elections, global trade tensions and U.S. rate hike expectations are all likely factors to force the CBN to remain status quo this quarter.”

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