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.
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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.
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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.
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