Inflation will jump to 27.57% on naira, diesel: FDC
Nigeria’s headline inflation for September is projected to jump to 27.57 percent on the back of naira weakness and the surge in the price of diesel, a crucial industrial fuel, according to the Financial Derivatives Company Limited.
The inflation report is slated to be released this week by the National Bureau of Statistics.
Analysts at Lagos-based FDC, led by economic expert Bismarck Rewane, expect inflation to rise for the ninth consecutive month from 25.80 percent in August.
“It will also be the highest inflation level in the last 18 years (September 2005). Price increases were most notable in the food basket, predominantly commodities with high import content such as flour, semovita, noodles, and sugar,” they said in a new report.
“With prices rising, fingers are pointing towards the exchange rate as the major inflation culprit. The naira crossed the psychological threshold of 1,000/$ in the parallel market, pushing up imported inflation despite the relative stability in global food prices,” the analysts added.
The FDC expects Nigeria’s food inflation to increase by 1.16 percent to 30.5 percent.
“Apart from the languishing naira, there are other inflation-stoking factors including higher logistics costs and money supply growth (36 percetlnt y-o-y). The price of diesel, the major fuel used by trucks for logistics and distribution purposes, surged to a record high of N1,030/litre,” it said.
However, month-on-month inflation, which is a more current measure of price movement, is expected to decline marginally to 2.78 percent from 3.18 percent in August, largely due to the harvest season impact, the analysts said.
