Yesterday, the National Bureau of Statistics (NBS) released its February 2021 Consumer Price Index (CPI) report, showing that headline inflation rose 17.33% y/y and 0.86% m/m on the back of a rise in both food Inflation and core Inflation, up 21.79% y/y and 12.38% y/y respectively in the month of February 2021.

The surge in food inflation on the back of supply chain disruption emanating from the pandemic, FX restrictions, border closure and climate-related shocks has continued to drive the rise in consumer price index alongside increasing utility costs.

The rise in food inflation for the period was on the back of a rise in the prices of food items such as; bread and cereals, potatoes, yam and other tubers, meat, fruits and vegetables, fish, oil and fats among other food items.

On the other hand, the rise in other items less farm produce (core Inflation) component was on the back of the spike in airfare, medical services, pharmaceutical products, motor cars, dental services, hair dressing, medical services, road transport fare, vehicle spare parts among others.

At the state level, all the states in the federation reported spikes in both headline and food inflation. For headline inflation, the states of Kogi (24.73% y/y), Bauchi (22.92% y/y), Ebonyi (20.45% y/y) recorded the highest increases in price, while Enugu (14.73% y/y), Kwara ( 14.25% y/y) and Cross River (12.97% y/y) saw the most minimal rise in the month of February.

Similarly, food Inflation surged mostly in Kogi (30.47% y/y), Ebonyi (25.73% y/y) and Sokoto (25.68% y/y), while Gombe (19.32% y/y), Bauchi (18.74% y/y) and Akwa Ibom (18.70% y/y) printed the least growth.

In this situation of tepid growth, rising inflation and unemployment, the economy sits in a precarious position that requires urgent and strategic efforts. Going forward, the outlook for inflation is not positive with pressure expected from both the food and core baskets of the CPI.

On the core inflation, we expect pressure from fuel subsidy removal and higher electricity prices. Crude oil prices have been up recently and the attendant impact on the landing cost of Premium Motor Spirit will translate into higher fuel prices unless the government decides on a return to the subsidy regime.

For food inflation, while the decision to reopen the border should be positive, we expect food prices to remain elevated on continued insecurity challenges in food-producing regions.


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