Analysis

Headline Inflation maintained a persistent upward trend, as the recent data from National Bureau of Statistics showed an escalation by 87 basis points to 28.20% on a year-on-year basis in November 2023, from 27.33% year-on-year in October 2023. Also, the month-on-month trajectory, after two consecutive declines, experienced a 2.09% increase in November 2023, surpassing the 1.73% recorded in October 2023 by 35 basis points.

Food Inflation, a prominent contributor to overall inflation, ascended to 32.84% year-on-year in November 2023 (October 2023: 31.52%). The effect of the harvest season, which contributed to a two consecutive month-on-month decline in Food Inflation, appear to be short-lived, as the month-on-month metric also increased to 2.42% in November 2023 (October 2023: 1.91%).

Despite a 22.38% decline in year-on-year Core Inflation (which includes all items less farm produces and energy) in November 2023 (October 2023: 22.58%), the month-on-month Core Inflation increased to 1.53% in November 2023 (October 2023: 1.39%).

Outlook

We expect the lingering effect of subpar harvest to persist into December 2023, thereby amplifying Food Inflation. Also, we anticipate the festive period to result in higher costs of commodities and transport services.

Moreover, the persistent depreciation of the Naira which averaged N832.57 in November 2023 in the official Nigerian Foreign Exchange market (October 2023: N789.12), leads us to anticipate sustained high import costs of goods throughout December 2023. Our projection for December Headline Inflation is 29.05%, with that, we are expecting Headline Inflation to average 24.53% for 2023.

Click here “November 2023 Inflation – Inflation Rate Escalates as Low Harvest Drive Food Prices” to view the full report.