Inflation rate to exceed 27% amidst economic woes — Experts

Nigeria’s headline inflation rate is expected to rise to 27.9 percent in October 2023, according to a forecast by Afrinvest West Africa experts.

This comes after the country recorded a 16-year high Consumer Price Index (CPI) of 26.72 percent in September 2023.

The forecast attributes the projected increase to the depreciation of the foreign exchange rate in both the official and unofficial markets.

Similar to previous months, food is expected to be the main driver of the CPI hike in October, primarily due to increased transportation costs for agricultural produce. However, the report notes that there was a boost in food supply during the month due to the ongoing harvest season.

Additionally, the rising prices of Petroleum Motor Spirit (PMS) and Diesel (AGO) in October 2023 are expected to significantly contribute to core inflation for the month.

The forecast by Afrinvest West Africa suggests that Nigeria’s inflationary pressures are likely to persist, posing challenges for the country’s economy. It remains to be seen how the government and relevant authorities will address these issues and mitigate the impact on the general population..

Some key solutions were highlighted in the report, including taming the growth of the money supply. It was noted that the money supply grew year-on-year by 40.3 percent in September 2023 as against actual economic growth of 2.5% within the same period.

The report also noted, “Fiscal spending must be more tilted towards value-creating capital spending as against consumption-focused recurrent needs.”

One of the solutions highlighted in the report is the ease of restrictions on food imports.

According to the report, a short-term solution to fixing food supply issues is to reduce tariffs on food imports, while a long-term solution is to address structural issues such as security, transportation, and logistics.

On the equities market, the report noted that since the NGX outperformed the inflation rate from the start of the year till October, it was highly unlikely that negative inflation sentiment would affect the market’s positive sentiment.