For the fourth straight month in 2021, Nigeria’s annual Headline Inflation rate eased to 17.38% in July of 2021, having moved from 17.75% reported in the month of June. The rate for the month is the lowest inflation rate since February-2021, please understand that, the reported ease was amid a further slowdown in prices of food & non-alcoholic beverages (21.03% against 21.83% in June) and despite the on-going naira’s devaluation.
On a monthly basis, consumer prices grew by 0.93%, decelerating from a 1.06% increase in the previous month. In our opinion, this is good news to the investing public, and had not posed any treat to investments. As the trend in other months, we do not expect any sharp response to the easing inflation, especially when it comes to equities investment; nevertheless, it is a plus to all capital market products, especially the fixed income market products.
Going by the high cost of goods and services within the country, where a tuber of yam now sells for N1,000 and above, & all food items are right at their respective pick prices, one will begin to wonder how the easing Inflation translated to improvement in the purchasing power of common citizen. But academically, easing inflation is positive to local currency strength and purchasing power.
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