Finance experts predict 0.76% increase in November inflation to 34.64%

As Nigeria’s economic landscape continues to grapple with the challenges of rising prices and inflationary pressures, a consensus forecast by financial experts suggests that the country’s inflation rate is poised to experience a further uptick in November, with a predicted increase of 0.76 percent to 34.64 percent, thereby sustaining the upward trend that has characterized the nation’s inflation profile in recent months.

The National Bureau of Statistics (NBS) will release its November inflation report on Monday, December 16.

Finance and economic experts from Financial Derivatives Company (FDC) Limited observed that based on its Lagos market survey and regression model, Nigeria’s headline inflation is projected to increase by 0.76 percent to 34.64 percent.

This increase is driven by seasonal factors and cost pressures, resulting in higher prices compared to the corresponding period in 2023.

The EIU forecasts inflation will peak at 35 percent in December 2024 and average 27.7 percent in 2025.

According to the EIU, a disinflationary trend is expected in the long term, supported by forex stability, trade policy, and base effects.

Similarly, the food and core sub-indices are expected to move in tandem with headline inflation, rising to 40.02 percent and 29.38 percent, respectively, especially eggs, rice, vegetable oil, and sardines.

According to FDC, monthly inflation, which is a more accurate measure of current inflation than annual inflation, is also projected to increase to 2.67 percent (annualized at 37.25%) from 2.64 percent.

“If our projection is correct, it will be the fourth consecutive increase after inflation was reversed in August. The reasons behind the surge are not far-fetched – they stem from the lingering effects of flooding in agricultural regions, as well as volatility in forex markets.

“With the Christmas season approaching, we anticipate further upward pressure on prices for essential food commodities such as rice, eggs, vegetable oil, pepper, malt, tomatoes, bread, Irish potatoes, onions, palm oil, noodles, and Turkey. These factors combined suggest a challenging economic environment as consumers brace for higher costs during this festive period. Food and core inflation are expected to move in tandem with headline inflation to 40.02 percent and 29.38 percent respectively,” Analysts from Afrinvest noted.

Consequently, the price resistance of consumers is increasing, and many are switching to affordable substitutes. In some cases, as is empirically endeared, we have noticed a drop in the quantity of goods demanded – as the Purchasing Manager’s Index (PMI) has shown a continuous decline.

According to the analysts, since price inflation is not a Nigeria-specific phenomenon at this time, there are indications that the price spiral is not likely to be short-lived.

“Month-on-month inflation to increase marginally Monthly inflation is a more accurate measure of current inflation than annual inflation as it gives the current situation in the market more than historical inflation. We are projecting that month-on-month inflation will rise to 2.67 percent (annualized at 37.25%) from 2.64 percent in October as cost pressures persist. It implies that the pace

of increase in the average price level surpassed the rate observed in October 2023,” FDC analysts stated their economic bulletin.

Food insecurity in Nigeria has reached alarming levels, exacerbated by insecurity, rising logistics and transportation costs, and seasonality. These factors have disrupted the food supply chain leading to widespread hunger and rising prices of food commodities.

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