April Inflation Review - Headline inflation drops to 12.5%, still sticky m/m
Headline inflation drops to 12.5%, still sticky m/m
Nigeria’s headline annual inflation fell to 12.5% y/y in April, slightly ahead of Vetiva forecast of 12.6%, but in line with Consensus expectation. This marked another material moderation in inflation as base effects from high 2017 inflation continue to suppress 2018 numbers. Following this trend, Core Inflation moderated to 10.9% y/y (March: 11.2%), the lowest reading since January 2016 whilst Food Inflation moderated to 14.8% y/y (March: 16.1% y/y), the lowest value since April 2016. Notably, Imported Food Inflation rose (from 15.8% y/y to 16.2% y/y) and remains higher than domestic food inflation, tracking a gradual increase in global food prices in 2018 (3% up ytd).
Helped by base effects, inflation has moderated at an impressive pace so far in 2018 – falling from 15.1% y/y in January to 12.5% y/y last month. With m/m sticky and amid still-strong base effects, this moderation should continue in the near term. Given the sheer stickiness in m/m inflation (against historical seasonal trend), we adopt a flat m/m inflation assumption for the coming months. As a result, our May inflation forecast drops to 11.3% y/y (previous: 11.7% y/y), bringing average full-year inflation to 11.6%.
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