Food inflation to drive Nigeria’s inflation – Experts

CAPE Economic Research and Consulting has stated that food inflation will continue to drive inflation in Nigeria.

In its Economic Newsletter for November, the economic think tank said headline food and core inflation are expected to rise to 27.41, 31.01, and 22.50 percent respectively.

While noting that inflation would heighten though at a moderate pace, the firm said the impact of food prices and exchange rates may play a strong role.

“However, housing and utility prices had a more robust impact in October 2023 than in September 2023. This suggests that the impact of an increase in energy prices and exchange rate continues to permeate into the economy and would continue to reflect over a 12-month period at the least, through a base effect,” it said.

On the Federal Accounts Allocation Committee (FAAC) allocation, the research firm noted said there may be a moderation in FAAC distribution for October 2023 adding that it may not dampen inflationary pressure significantly.

“The Federation Account Allocation Committee (FAAC) distributed the total sum of N903.48 billion among the three tiers of government in the month of October 2023 for revenue collected in September 2023. The amount distributed was lower than the N923.01 billion shared in September 2023 by N19.53 billion representing a decrease of 2.1 per cent.

“A further breakdown shows that the Federal Government received N320.54.25 billion; States, N287.07 billion Local Government, N210.90 billion. Thirteen percent derivation fund distributed among beneficiary states amounted to N84.97 billion. Revenue allocation to all the three tiers of government generally declined in October 2023 except for the 13 percent derivation fund.

“The decline was driven by the shortfall in non-oil. receipts, particularly, Companies Income Tax (CIT), Import and Excise Duties, and Value Added Tax (VAT). Collections from Petroleum Profit Tax (PPT), and Oil & Gas Royalties increased during the period,” it said.