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NIGERIA July 2023 Inflation review - Inflation moves the needle to 24%, induced by energy prices

In July, headline inflation rose by 129bps to 24.08% y/y (Vetiva: 23.70%). On a month-on-month basis, headline inflation surged by 2.89% m/m. We attribute the surge to higher energy prices. According to the report released, the energy index surged by 5.8% m/m in July, which is significantly higher than the 0.66% m/m outcome reported in June.

Food inflation surged to new 18-year high, core remains elevated Food inflation surged to 26.98% y/y in July (Jun’23: 25.25% y/y), its highest since October 2005. On a month-on-month basis, food inflation rose to 3.45% m/m amid elevated transport prices. Farm produce inflation remained elevated at 42.32% y/y (Jun’23: 36.83% y/y).

Outlook: Inflation could rise further in August In August, we see headline inflation nudging higher to 25.33% y/y. As a result, we maintain our full-year headline inflation expectation of 25.41% y/y in 2023 (2022: 18.76% y/y).