No increase in general prices as inflation flat at 9.2% — NBS

The inflation figure rolled out yesterday by the bureau of statistics has shown that the economy recorded no change in general price level for the month of July.

According to the National Bureau of Statistics (NBS), the Consumer Price Index (CPI) report for July remained flat in spite of the on-going price adjustment in the market place.

Headline Inflation for July was estimated at 9.2%, unchanged from the rate reported in the Month of June; thus halting a seven consecutive monthly rise in price level since December 2014.

Going by the  NBS report, inflation rate in July was unchanged due to muted rises in the prices of food and non- alcoholic beverages, housing, water, electricity, gas and fuel.

In the list were furnishings & household equipment Maintenance divisions amongst others.

The food index which include farm produce and processed food rose by 10 per cent over the period in July, also maintaining the same pace for the second consecutive month while core inflation index (All items less farm produce) increased by 8.8 per cent for the same horizon.

This however is 40 basis points higher than rates recorded in June.

However, Month-on-Month increase in headline inflation softened for the second consecutive month, settling at 0.7 per cent, that is 20 basis points less than 0.9 per cent recorded in June.

Food Inflation was not changed from June; rises by 10 per cent since last year equivalent period. The Food sub-index of the July CPI rose 10 per cent, same as the rate recorded in June.

This remains the highest for the year.

A slower increase in the prices of Meats, Fish and Fruits, and Potatoes, Yams and Tubers groups, impacted the Food Sub-index as a whole, thus, stabilising food inflation in July.

Therefore, a slower pace of increase was also observed on month over month basis, as the Food sub-index decelerate by 0.8 per cent relative to 1.1 per cent in June.

In its reaction, Afrinvest said it is surprising to see that despite the CBN’s policy which excludes key components in the food basket from items valid for forex transactions on the 23rd of June 2015, we observed that all groups which contributed to the Food Sub-index also increased at a slower rate in July with the exception of the Oils & Fats group.

The average annual rate of change of the Food Sub-index for the year on year settled at 9.6 per cent in July 2015, representing a marginal increase higher than the average annual rate of change of 9.5 per cent in June.

However, rates remain at record highs for the year, predictably due to higher imported food prices following the unrelenting pressure on FX rate, stringent conditions of obtaining foreign currency put in place by the CBN and fuel crises experienced so far in the year.

Core Inflation Sustains Uptrend as it went up by 8.8 per cent in the last one year.

All items less Farm Produce, which represents Core Inflation for the month of July, hastened to 8.8 per cent. 

This was 40 basis points higher than 8.4 per cent recorded in June.

This was the seventh consecutive rate of increase in the sub-index since the beginning of the year.

In addition, the Core inflation also rose 0.6 per cent month over the month; this is however 20 basis points lower than 0.8 per cent recorded in June.