Reports from the National Bureau of Statistics, indicates that Nigeria’s headline inflation printed largely flat from a month ago (0.73% m/m), albeit rising at a slower pace on a year-on-year basis (-7 bps to 11.31% y/y) due to slower core and food inflationary movements.
Whilst year-on-year core inflation remained in single digit territory for the sixth consecutive month (9.8% y/y), the month-on-month reading (-20bps to 0.65% m/m) normalized from the surprise outturn in January, on account of subdued energy prices and still stable FX.
Meanwhile, for the third straight month, food inflation (-3 bps) moderated slightly from a year ago, on account of the second order impact of naira stability on food prices.
Looking ahead, we remain largely sanguine on moderation in headline inflation over the month of March, as there are no strong cases for a negative surprise for both the core and food baskets. Overall, we look for headline inflation reading of 11.22% y/y in March.
According to the data released by the CBN, Nigeria’s current account position returned to surplus territory in Q4-18, printing USD1.10 billion against a USD1.54 billion deficit in Q3-18.
The surplus position owed much to the rapid expansion in trade surplus (+80.7% q/q) as the value of imports (-20.7% q/q) normalized from the sharp increase in the prior quarter.
Meanwhile, exports increased marginally by 2.8% q/q on account of higher crude oil and non-oil exports. Other notable bright spots include improved current transfer (+5.7% q/q) and moderation in income deficit (-10.8% q/q), both of which neutered the widened service deficit (+16.5% q/q).
Experts at Cordross securities say the impact of still elevated crude oil price and improved crude production will continue to buoy overall export, while lower petroleum import should keep import at bay.