Analysts peg October inflation at 33.48%

Analysts have projected that Nigeria’s inflation figure for October will hit 33.48 per cent from 32.70 per cent in September.

This projection is coming ahead of the National Bureau of Statistics inflation report for October expected to be released on Friday.

According to a Senior Market Analyst At FXTM, Lukman Otunuga, inflationary pressures have been cooling in recent months but the latest figure for October is expected to have jumped 33.4 per cent from 32.7 per cent in September.

“This may be the result of fuel hikes and floods in the northern part of the country affecting the harvest season. The Central Bank of Nigeria has been on a mission to support the naira and attract investments using aggressive monetary policy.

“Interest rates were raised by 50 basis points to 27.25 per cent in September – marking its fifth consecutive hike in 2024. Should the naira show signs of stabilising, annual inflation could peak in the final quarter of this year,” he said.

Following Donald Trump’s victory at the polls, Otunnuga had projected that the Nigerian economy may be negatively impacted.

He said, “His (Donald Trump’s) return to the White House could result in higher domestic oil production while potential tariffs on China may impact global demand. This combination of rising supply and falling demand could enforce fresh pressures on oil which is down four per cent since the start of 2024. Should oil prices continue to weaken, this could threaten countries who acquire a chunk of their revenues from oil sales.”

Also, analysts at Meristem in their inflation expectation report pegged headline inflation at 33.48 per cent, representing a 78bps increase over the previous month.

Similarly, core inflation is expected to rise to 28.64 per cent from 27.43 per cent.

Part of their report read, “Headline inflation reversed its previous decline in September 2024, climbing to 32.70 per cent from 32.15 per cent in August after two months of disinflation. As of September 2024, food inflation rose to 37.77 per cent, while core inflation stood at 27.43 per cent. In October, inflationary pressures remained strong, driven by persistent legacy issues in the country’s food sector and the lingering effects of the September flash floods. This led to a decrease in crop yields, undermining expectations of a bumper harvest and pushing food prices higher during the month.

“Additionally, the rise in transportation costs (fueled by an approximate 15 per cent increase in PMS prices during the month), is further impacting food prices. Moreover, the continued depreciation of the naira, which raised the costs of import-dependent goods such as clothes, footwear, furnishings, and household equipment, among others, added to the overall inflationary pressures. For context, the Naira weakened further on the NAFEM window, averaging N1,635.11/USD in October 2024, compared to N1,589.86 in September.

“Thus, we expect food inflation to maintain its upward trend in October, driven by the factors outlined above. Furthermore, we anticipate a rise in core inflation for October, driven by rising fuel prices and ongoing naira depreciation. Overall, we project a sustained increase in the country’s inflation in October 2024 due to these combined factors.”