Inflation may decelerate by December – Rewane

After months of consistent surge in the last nine months, inflation may resume a descent in the next three months, Chief Executive Officer of Financial Derivatives Company (FDC) Limited Bismarck Rewane, has said.

He noted that though inflation defies the norms and expectations of market watchers, the rate of increase slowed in September.

“Whilst inflation has defied expectations, it is noteworthy that the pace of increase in the general price level slowed.

“Also, the monthly inflation sub-index, which is a more current measure of price movement declined sharply by 1.08 per cent to 2.1 per cent (annualized at 28.34 per cent).

“If this trend is sustained, our projection is that inflation will peak within the next three months and decline thereafter,” said Rewane.

Rewane, in the FDC’s Economic Splash for September released Tuesday said, food prices are known to decline towards the end of every third quarter of the year. He however said, data made available by the NBS beats expectations and the usual norm, where inflation rate usually decelerate by the end of September.

A breakdown of the data showed that prices increased across all baskets, with food inflation spiking to a record high of 30.64 per cent.

“Typically, food prices decline towards the end of the third quarter as the harvest season kicks in. The aberrational movement specifically in 2023, is largely because of logistics constraints (bad road network, high distribution cost, among others) and the exchange rate pass-through effect on domestic prices.

“Year-to-date, the price of a 50kg bag of flour has increased by 16.18 per cent despite the 24.18 per cent decline in the global price of wheat.

“Also, core inflation (which excludes energy prices and seasonality) increased by 0.69 per cent to 21.84 per cent”, said FDC.

The National Bureau of Statistics released its September inflation data yesterday (October 16). In line with expectations, headline inflation continued its upward trend, rising to 26.72 per cent from 25.8 per cent in August.

For Rewane, the big risk is that the proposed increase in wages and the effective date of the wage increase will be a potent factor in keeping inflation at elevated levels.

Inflation analysis for the Nigerian states shows that all items inflation rate on a year-on-year basis was highest in Kogi at 32.95 per cent, followed by Rivers at 30.63 per cent, and Lagos at 30.04 per cent.

The report, however, said in September 2023, all items inflation rate on a month-on-month basis was highest in Taraba at 3.39 per cent, Bauchi at 3.38 per cent and Niger at 3.28 per cent.

“Borno at 0.71 per cent, followed by Ekiti at 1.05 per cent and Benue at 1.13 per cent recorded the slowest rise in month-on-month inflation.”

Food inflation was highest in Kogi at 39.37 per cent, followed by Rivers at 35.95 per cent and Lagos at 35.66 per cent.

“Jigawa at 23.41 per cent, followed by Borno at 25.29 per cent and Sokoto at 25.38 per cent recorded the slowest rise in food inflation on a year-on-year basis.’’

On a month-on-month basis, food inflation was highest in Akwa Ibom at 4.23 per cent, followed by Niger at 4.19 per cent and Ebonyi at 3.74 per cent.
“With Cross River at 0.31 per cent, followed by Borno at 0.62 per cent and Bayelsa at 0.73per cent recorded the slowest rise on month-on-month food inflation.’’