After declining for two consecutive months in July and August, Nigeria’s headline inflation likely rose to 32.37 per cent in September 2024, Financial Derivatives Company (FDC) has predicted.
In a report released over the weekend, the firm said its forecast was conditioned on new petrol prices, which, it said, led to higher transportation and logistics, “coupled with exchange rate volatility and floods in northern Nigeria, which will undermine agricultural production.”
According to data released by the National Bureau of Statistics (NBS), the inflation rate fell for the first time in nineteen months to 33.40 per cent in July and further decelerated to 32.15 per centin August, thus leading to expectations in some quarters that the downward trend will continue in September.
But explaining why it believes inflation headed north in September, FDC said: “We are estimating a marginal increase in both headline and monthly inflation.
The trend of falling inflation is being bucked for some reasons – the new petrol price, which led to higher transportation and logistics coupled with exchange rate volatility and floods in northern Nigeria, which will undermine agricultural production.
“The September inflation numbers will be released by the NBS on October 15. At FDC, we project that the headline inflation will increase marginally by 0.22 per cent to 32.37 per cent. This will bring an end to the declining trend that commenced in July.”
The firm further stated: “The harvest season has been primarily responsible for the disinflation in the last two months. However, its price moderating impact in September was, to a large extent, limited by the higher petrol price and exchange rate depreciation.
This development led to supply shortages of some essential commodities such as rice, beans, chicken, etc., thus creating market disequilibrium. “The resulting impact of this was a spike in the prices of these commodities.
For instance, the price of a 50kg bag of rice increased by 36 per cent to N120k in September from N88k. A bag of beans now sells at N180,000 from N160,000.”
Still, the FDC said it expects annual and monthly food inflation to continue its declining trend to 36.59 per cent and 2.21 per cent from 37.52 per cent and 2.37 per cent respectively due to harvest season.
“The effect of the boost in food supply more than compensated for the increase in logistics costs– as prices of commodities like tomatoes (10%), onions (20.7%), and Garri (5%) declined from the previous month. While the price of Palm oil, yam, egg sweet, and Irish potatoes remained unchanged,” it added.