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The National Bureau of Statistics (NBS) has stated that headline inflation for the month of August marginally increased to 9.3% year on year, from 9.2% in July. In its latest Consumer Price Index (CPI) report, the NBS says the slow pace of increase in food prices, is what is responsible for the marginal increase in inflation.

According to the report, “The Food Sub-index rose by 10.1% (year-on-year) in August, slightly higher from 10.0% in July.” The August data shows an eight consecutive rise in headline inflation.

NBS further states that, “While increases were observed in major groups within the index: Bread and Cereals, Meats and Fish, the index was weighted upon by a slower increase in the Fruit, Vegetables, and Potatoes, Yams and Other Tubers groups.”  

On a monthly basis, NBS reports that the rate of increase of headline inflation eased for the third consecutive month. “The Headline index increased by 0.6% in August, marginally lower from 0.7% in July," the August 2015 inflation data observed. The rate of change of the imported food index, which is 13.2% of CPI, was at 10.6% in August year-on-year, compared with 10.4% in July. This, according to a statement by CardinalStone Research, reflects the impact of the weaker Naira, especially at the parallel market, on imported food prices.

"Utilities", "Clothing & Footwear" and "Transport" sub-indices recorded monthly increases of 0.58%, 0.51% and 0.40% respectively, which is slower than the 0.59%, 0.73%, and 0.72% recorded in July. While the Urban index increased at the same pace to 9.2% year-on-year, the Rural index increased 0.2% points to 9.4%, from 9.2% in July.
 
CardinalStone Research says, among other things, “An examination of Q2 2015 GDP figures suggests weakness in aggregate demand and cost pressures which resulted in weaker growth across the manufacturing and services sectors. Thus, we are inclined to attribute the rise in core inflation to the exchange rate pass-through considering the index includes an 'imported/processed food' component which would have impacted prices.”

The financial advisory and investment management company further states that, “with inflation rising and GDP growth stagnating, Nigeria faces stagflation driven mostly by monetary policy actions amidst fiscal inaction. Therefore, September MPC's meeting could not have occurred at a more opportune time for the Central Bank to take decisive steps to respond to slowing growth and rising inflation.”