Inflation dips slightly in March, but data only reflects prices before lockdown

"The inflation rate slowed again in March, mainly due to falling prices for clothing and motor fuel", said ONS head of inflation Mike Hardie.

Statistics Canada reports the March inflation reading was up 0.9 per cent compared with a year ago, its smallest increase since May 2015.

The figure is a sharp deceleration compared to the 2.2 per cent rate seen in February.

According to the bureau, the highest increase recorded is on fish, vegetables, fruits, oil and fats, bread and cereals, potatoes, yam as well as other tubers.

Although a decline was recorded in March, the inflation rate is still well ahead of the SA Reserve Bank's medium-term forecasts for consumer inflation, which were recently revised to an average of 3.6% for 2020 given that the bank now expects the country's economic growth to contract by 6.1% for the year.

Prices for food and non-alcoholic beverages increased by 4.2 percent annually in March.

"The percentage change in the average composite CPI for the twelve months period, ending in March over the average CPI for the previous twelve months period was 11.62 percent showing 0.08 percent point from 11.54 percent recorded in February".

Commenting, analysts at Lagos based investment firms, Afrinvest Limited and United Capital Plc, projected that the inflation rate will rise faster this month due to impact of COVID-19 restrictions and onset of the planting season.

"This is attributable, in part, to border protection policy, disruptions and challenges around food production belts, and pass-through from the recent Value-Added Tax increase".

The report did not consider the lockdown in Abuja, Lagos and Ogun states as well as major disruptions in normal economic activity in several states which started only in April. This was the seventh consecutive month of increase since August 2019 and the highest level since April 2018.