Headline Inflation climbs to 12.34% YoY
According to the National Bureau of Statistic (NBS), headline inflation rose for the 9th consecutive month to 12.34% YoY (1.02% MoM) in April 2020. The current reading was largely in line with our 12.31% forecast and ahead of Blomberg consensus estimate by 12.27%. The rise in headline inflation mirrored pressures on both core (+25bps to 9.98% YoY) and food (+5bps to 15.03% YoY) inflation sub-indices.
Core inflation gathering momentum
While food inflation remained a primary driver of inflation in April, core inflation has noticeably soared in recent months, rising by 55 bps in the last two months and 63 bps since January 2020. For context, the core inflation increase over March and April equates the cumulative traction in the inflation sub-index witnessed over the preceding six months. Interestingly, the acceleration of core inflation also coincided with domestic lockdown responses to coronavirus spread, downward repricing of the naira, and a 2.5 ppts increase in VAT rate to 7.5% in February. Clearly, disruptions to supply chains and naira weakness are beginning to tell on local prices as evinced by the increases in all key core inflation sub-indices save for the Housing, Water, Electricity, Gas and Other Fuel (HWEGF) sub index, which marginally moderated on softer PMS pump prices.
 We believe recent food inflationary pressures reflected lean season shortages, sustained border closures, and panic buying
Figure 1: YoY movement in inflation rate since February (bps)