Nigeria’s Inflation – galloping towards 15%

Must Read

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Mobile Banking USSD Codes For All Banks in Nigeria and how to use them

The introduction of USSD codes (Unstructured Supplementary Service Data) has changed the Nigerian banking system completely. Today, mobile banking...

Top 10 Most Expensive Universities In Nigeria

For many Nigerians, high-quality higher education is a luxury. There are many private universities who are known not only...
- Advertisement -

Based on our market survey and regression analysis, headline inflation is estimated to increase by 0.57% to  14.8% in November. If this happens, it means that inflation will rise for the 15th consecutive month. Our analysis also points to an increase in all the inflation sub-indices. Food inflation is projected to rise to 17.5%, core to 11.3% and month-on-month to 1.5%.

Nigeria’s Inflation - galloping towards 15% Brandspurng

The consumer price index (CPI) has steadily increased since September 2019, largely due to money supply saturation, supply-side challenges and cost-push factors. The closure of the land borders, heightened insecurity in the food-producing states and more importantly slow disbursement of forex and rationing limited commodities supply.

This combined with money supply growth (3.53%), supply chain disruptions,  higher logistics costs and electricity tariff hike exacerbated inflationary pressures. More so, November is the first month in which the impact of the increase in the price of PMS and a partial rise in electricity tariffs will feed into the inflation basket.

The Federal Government has announced a N5 per litre reduction in the pump price of Premium Motor Spirit  (PMS) effective December 14. Although this could slightly ease pressures on consumers’ disposable income,  it is highly unlikely that transporters will reduce their fares as a result of the price fall. It also raises fundamental concerns about the deregulation of the downstream petroleum industry especially at a time when global oil prices are rising.

- Advertisement -

Since the liberalization of the downstream oil & gas sector, petrol price has increased by over 30% to N170/  litre.

Read Also:  With GE’s Technology, Nigeria’s Indorama Eleme Petrochemicals Boosts Power Plant’s Output and Availability

The CBN has intensified efforts towards achieving price and exchange rate stability through increased forex supply and introduction of special bills. An increase in forex supply will have a positive impact on output.

The special bills, which qualify as liquid assets on banks’ balance sheets, will serve as a ‘replacement for cash’ for 90-days. This will help mop up market liquidity, push up interest rates and taper inflationary pressures.

SSA Regional Trend – Mixed movement in inflation

Inflation trend across Sub-Saharan Africa was mixed. Three of the countries under our review recorded lower inflation rates while the other three posted increases. The inflation trajectory was largely determined by food price movement, transport costs and exchange rate value.

- Advertisement -

The monetary authorities left their monetary policy rate unchanged at their respective meetings. This is aimed at moderating risks to financial stability while supporting output growth. At the same time, it will allow the impact of the previous policy measures to be fully transmitted.

Nigeria’s Inflation - galloping towards 15% Brandspurng1

Concluding Thoughts

Inflation will continue its upward trend in December due to supply chain disruptions, exchange rate devaluation, forex restrictions and increased festive demand. The continued rise in inflation will be a major consideration at the MPC meeting in January 2021.

Read Also:  Month-on-Month Inflation Expands at a Slower Pace in December

The committee may be forced to change its current policy stance and adopt a tighter monetary policy.

- Advertisement -
Nigeria’s Inflation - galloping towards 15% - Brand SpurNigeria’s Inflation - galloping towards 15% - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Nigeria’s Inflation - galloping towards 15% - Brand SpurNigeria’s Inflation - galloping towards 15% - Brand Spur

Latest News

Here Are The Average Prices Of Petrol, Diesel, Kerosene And Cooking Gas For December 2020

The average price paid by consumers for premium motor spirit (petrol) increased by 14.62% year-on-year and month-on-month by 3.79%...

Implications of Social Unrest for the Nigerian Insurance Industry

The Nigerian economy has become increasingly prone to violence and social unrest due to a growing public resentment against the government. Insurgency groups such...

African Countries Not Ready to Implement Free Trade from January

AfCFTA's secretariat says adoption will be slow as many nations lack border facilities. In 2019, 14.4% of official African exports went to other African...

NYSC Partners With IITA To Create Opportunities For Nigerian Youth (Photos)

The National Youth Service Corps (NYSC) and IITA are partnering to open up opportunities to youth in Nigeria. The two organizations signed a memorandum of understanding (MoU)...

IITA Focuses On Integrated Digital Tools For Accelerating Agricultural Transformation In Sub-Saharan Africa

IITA has been at the forefront of using information and communication technologies (ICTs) for research management and knowledge sharing, including extension, scaling out, e-learning, collaboration,...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Nigeria’s Inflation - galloping towards 15% - Brand SpurNigeria’s Inflation - galloping towards 15% - Brand Spur