Elevated Price Level – The New Normal?
Earlier today, the National Bureau of Statistics (NBS) released its inflation report for August 2023. Headline inflation continued to surpass its 18-year high as it climbed higher by 172bps Year-on-Year (YoY) to 25.80% from 24.08% in July 2023. Similarly, Food inflation surged by 235bps YoY to 29.34% (vs. 26.98% in July 2023), marking the highest rate since September 2005. Furthermore, Core inflation recorded its highest rate since December 2006, as it added 67bps YoY to settle at 21.15% (vs. 20.47% in July 2023). We believe that the record-breaking increases in inflation figures rests on the back of the continued impact of the removal of Premium Motor Spirit (PMS) subsidy and further depreciation of the exchange rate. On a Month-on-Month (MoM) basis, Headline inflation increased by 29bps to settle at 3.18% from 2.89% in July 2023.
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