The headline inflation rate in April 2024 increased to 33.69%, up from 33.20% in March 2024, showing a 0.49% increase compared to March. On a y/y basis, the headline inflation rate was 11.47% higher than the rate recorded in April 2023, which was 22.22%. Additionally, on a m/m basis, the headline inflation rate in April 2024 was 2.29%, marking a 0.73% decrease from the rate recorded in March 2024 (3.02%). In April 2024, the average price level increased at a slower rate compared to March 2024. The contributions of items at the Divisional level to the increase in the headline index are outlined below:

The average CPI for the twelve months ending April 2024 increased by 28.10% compared to the previous twelve-month period, showing a 7.28% increase from April 2023's 20.82%.

Urban and Rural Inflation

In April 2024, the urban inflation rate on a y/y basis was 36%, which was 12.61 percentage points higher than the 23.39% recorded in April 2023. On a month-on-month basis, the urban inflation rate was 2.67% in April 2024, which was 0.50 percentage points lower than March 2024 (3.17%). The twelve-month average for the urban inflation rate was 30.02% in April 2024, which was 8.53 percentage points higher than the 21.50% reported in April 2023. The rural inflation rate in April 2024 was 31.64% on a year-on-year basis, which was 10.50 percentage points higher than the 21.14% recorded in April 2023. On a month-on-month basis, the rural inflation rate in April 2024 was 1.92%, down by 0.95 percentage points compared to March 2024 (2.87%). The corresponding twelve-month average for the rural inflation rate in April 2024 was 26.38%, which was 6.20 percentage points higher than the 20.18% recorded in April 2023.

Food Inflation

The food inflation rate increased in April 2024 to 40.53% on a y/y basis, 15.92 percentage points higher than the rate recorded in April 2023 (24.61%). The rise in food inflation on a y/y basis was caused by increases in prices of items such as millet flour, garri, bread, wheat flour pre-packed, semovita (which are under bread and cereals class), yam tuber, water yam, cocoyam (under potatoes, yam, and other tubers class), coconut oil, palm kernel oil, vegetable oil, etc (under oil and fat), dried fish sardine, catfish dried, mudfish dried (under fish class), beef head, beef feet, liver, frozen chicken (under meat class), mango, banana, grapefruit (under fruit class), Lipton tea, Bournvita, Milo (under coffee, tea, and cocoa class).

On a m/m basis, the food inflation rate in April 2024 was 2.50%, which shows a 1.11% decrease compared to the rate recorded in March 2024 (3.62%). The fall in food inflation on an m/m basis was caused by a decline in the rate of increase in the average prices of yam, water yam, Irish potatoes (under potatoes, yam & other tubers class), beer, local beer (under tobacco class), Milo, Bournvita, Nescafe (under coffee, tea, and cocoa class), groundnut oil, palm oil (under oil and fats class), egg, fresh milk, powdered milk, tin milk (under milk, cheese, and eggs class), soft drinks, e.g., Malt Guinness, Coca-Cola, etc., spirit (local production), Chelsea, Seaman Schnapps (under spirit class), wine and fruit e.g., watermelon, pineapple, banana, pawpaw, etc. The average annual rate of food inflation for the twelve months ending April 2024 over the previous twelve-month average was 32.74%, which was a 9.52 percentage point increase from the average annual rate of change recorded in April 2023 (23.22%).

All Items Less Farm Produce and Energy 

The “All items less farm produces, and energy” or Core inflation, which excludes the prices of volatile agricultural produces and energy, stood at 26.84% in April 2024 on a year-on-year basis, up by 6.87% when compared to the 19.96% recorded in April 2023. The highest increases were recorded in prices of the following items Actual and Imputed Rentals for Housing, Journey by motorcycle, Bus Journey within a city (under Passenger Transport by Road Class), Consultation Fee of a medical doctor, X-ray photography etc (under Medical Services Class), and Accommodation Services.

On a m/m basis, the Core Inflation rate was 2.20% in April 2024. It stood at 2.54% in March 2024, a decrease of 0.34%. The average twelve-month annual inflation rate was 22.84% for the twelve months ending April 2024; this was 5.15% points higher than the 17.70% recorded in April 2023.

Implications for The Financial Market

Proshare News engaged market analysts on the implications of the April 2024 Inflation figure on the financial market.

Mr David Adonri, a Chartered Stockbroker with Highcap Securities, said, “The monthly rate of inflation growth appears to have slowed down compared to previous months. Also, contrary to the forecast, inflation did not cross 34% in April 2024. It may, therefore, indicate that it is responding to earlier contractionary monetary policy, thus making further hikes in interest rates unnecessary. The Equities Market is, therefore, expected to be stable but may still experience downside correction to align market fundamentals with the value of stocks.”

Mr Seyi Akinbi, an investment analyst, believes the attractive yields in the Fixed Income market will continue to entice investors to invest more capital into the market, with less allocation to the equities markets. 

With less than four days to the third Monetary Policy meeting of the Central Bank of Nigeria, Mr Olatunde Amolegbe, former President of the Chartered Institute of Stockbrokers and a market analyst, opines that the CBN will continue with its tightening stance. 

He added, “The Interest rate will continue to rise, and investors will continue to reposition their portfolios away from equities towards fixed-income instruments.

I expect that stock prices will continue to correct for the foreseeable future.”