Despite the fact that inflation in April continued its upward trend for the third consecutive month, reaching 16.82 percent, financial sector analysts have forecast additional inflationary pressure in the upcoming months.

They pointed to the ongoing strain on energy and food prices brought on by the conflict between Russia and Ukraine.

The National Bureau of Statistics, or NBS, reported in its Consumer Price Index (CPI) yesterday that the headline inflation rate increased to 16.82 percent in April 2022, a 0.90 percent increase from 15.92 percent in March 2022.

The Bureau reports that all of the COICOP divisions that produced the headline index saw rises.

The headline index rose to 1.76 percent in April 2022 on a month-over-month basis, which is 0.02 percent higher than the rate of 1.74 percent in March 2022, according to the statement.

However, the consumer price index (CPI), which gauges inflation, dropped to 16.82 percent in April, 1.3 percentage points lower than the 18.12 percent recorded in April 2021, causing inflation to slow down Year-on-Year (YoY) in April.

Urban inflation dropped from 18.68 percent in April 2021 to 17.35 percent (YoY) in April 2022, and rural inflation dropped from 17.57 percent in April 2021 to 16.32 percent in April 2022.

According to the MoM, the urban index increased to 1.78 percent in April 2022, which was 0.02 percent higher than the rate of 1.76% in March 2022, and the rural index increased to 1.74 percent in April 2022, which was 0.01 percent higher than the rate of 1.73% in March 2022.

Additionally, according to the agency, the composite food index increased 1.17 basis points year over year (YoY) from 17.20 percent in March 2022 to 18.37 percent in April 2022.

The food index increased as a result of the price rises for bread and cereals, food items, wine, fish, meat, and oils, as well as potatoes, yams, and other tubers.

According to the NBS, the CPI, which gauges inflation, rose 16.82% year over year (YoY) in April 2022. The rate from April 2021 (18.12%) is 1.3 percentage points higher than this one. This indicates that, in comparison to the same month last year, the headline inflation rate decreased in April.

All of the COICOP divisions that produced the headline index saw increases.
The April number is in line with what analysts had predicted for the month.

“We expect to see further increased inflationary pressure in the coming months due to rising insecurity which continues to negatively impact food distributions across the country,” stated Cowry Asset Management analysts in their March forecast. Furthermore, the rainy season, the impact of the price of crude oil on transportation costs, and the growing demand pressure on the Greenbank would all increase costs.

“We anticipate further expansion in the inflation rate caused by the continuous increase in food prices and energy costs owing to the sustained tension between Ukraine and Russia,” Alpha Morgan Capital analysts stated in response to the April inflation rate.

Analysts at Cordros Capital also commented, explaining that the greater demand for food during the review period due to Ramadan and Easter was the reason for the broader difference between supply and demand. The impact of off-season crops in the world was, in our opinion, offset by the aforementioned high global food prices made worse by the Russia-Ukraine conflict and increased transportation costs.
With the equivalent base from the previous year translating to a 74-bps increase in the y/y inflation rate to 17.56%, they predicted that headline inflation would settle at 1.65% m/m in April, taking into account all relevant considerations.