Citing the recent fuel price hike, the effects of the new minimum wage as well as sticky core inflation, analysts at Financial Derivatives Company (FDC) have said that they expect an increase in October inflation.
The analysts, who stated this in a report released over the weekend, opined that the decline in inflation in July and August was not enough evidence to believe that inflation is now on a downward trend.
As the analysts put it, inflation will rise in October after the petrol price increase (and) minimum wage effect.” They also pointed out that core inflation, “takes longer to moderate.”
The analysts , who noted that Nigeria’s inflation is, “more structural than transient,” said that while inflation decelerated to 32.15 per cent in August from 33.40 per cent in July, “risks remains high,” adding that “in August, annual and monthly core inflation remained high at 27.58 per cent and 2.27 per cent, respectively.”
According to them, the transient factors responsible for the country’s inflation include, seasonal variations, energy price shocks, supply chain disruption, currency depreciation and pandemic -related shocks, while the structural factors comprise, low productivity, infrastructural deficit, high insecurity issues in farming communities, frequent scarcity of petrol, inflation expectation and flooding.
Specifically, the analysts said that the recent increase in the price of petrol will worsen inflationary pressures as it pushes transport and logistics cost up and result in increased operational costs for businesses. Indeed, the analysts predicted that, “September inflation numbers will come in above 32 per cent mainly due to the high petrol price.”