There was broad-based moderation across the Consumer Price Index (CPI) basket, reflected in the 64 basis points temperance in the October 2021 headline inflation to 15.99%, the lowest level in ten months.
The latest inflation data was lower due to a much steeper decline in core inflation (-51bps to 18.24%).
It is unclear to us what drove the notable deceleration in core inflation, given noticeable price pressures in 86.8% of the core inflation sub-components.
Elsewhere, food inflation tapered by 1.23ppt to 18.35%, the lowest level since November 2020. Analysts are linking the slowdown in food inflation to the base effect, continued CBN interventions, and commencement of the main harvest season in parts of the country.
“We project a further moderation in headline inflation to 15.40% YoY in November 2021 on the sustained impact of the base effect. And FX stability. However, we expect festive induced demand to pressure the Month on Month inflationary reading,” analysts at Cardinal Stone Partners said.