Inflation to surpass 33 per cent this month, analysts project

Inflation will settle at 33.1 per cent this month, analysts at Cowry Asset Management Limited have said. The projection is premised on the impacts of the recent rise in fuel price to around N1000. This is also linked to the continued impacts of flooding in key food-producing areas.

Nigeria’s headline inflation decelerated in July and August but increased to 32.7 per cent in September 2024, defying the Central Bank of Nigeria’s (CBN) monetary tightening efforts.

The rise was influenced by the surge in petroleum prices and the continued depreciation of the naira, reflecting ongoing pressure despite policy interventions aimed at easing inflation.

An analysis of economic and market forces in September 2024 showed that the 0.55 per cent increase in the headline index compared to the previous month highlights the effects of flooding in key food-producing regions and the rising input costs, driven by higher distribution expenses.

The factors offset the benefits of increased food supply. The depreciation of the naira and the significant rise in fuel prices since early September have also contributed to increased costs across various items, reflected in the divisional level.

On a monthly basis, the inflation rate stood at 2.52 per cent, 0.3 per cent higher than the 2.22 per cent recorded in the previous month. This increase was driven by higher prices for food and non-alcoholic beverages, housing, clothing and footwear, health, education, restaurants, hotels, and other items that contributed to the overall inflation rate for the month.

“Looking ahead to October, we anticipate a further, though moderate, increase to 33.1 per cent, driven by the recent rise in PMS prices to around N950, and in some parts of the country, above N1,050, as well as the continued impact of flooding in key food-producing areas.

to the rising inflation, the Chief Executive Officer of Cowry Asset Management, Johnson Chukwu, said the effectiveness of the CBN’s tight monetary policy in curbing inflation remains uncertain, particularly due to structural challenges such as inadequate infrastructure, high fuel costs, unreliable power supply and logistical bottlenecks.

A professor of economics at Olabisi Onabanjo University, Ago Iwoye, Ogun State, Prof. Sheriffdeen Tella, pointed out that the inflationary pressure is not expected to abate any time soon because the underlying factors that have continued to trigger the hike are not tackled.

“We expect the price to go up again when this month’s data is released by next month. If government fails to control that price, it will continue to affect other allied products,” he said. An independent investor, Amaechi Egbo, attributed the continuous inflationary pressures to the country’s low productivity.