One of the key assumptions of the budget is to bring inflation down to 12.4% in 2018, through an improvement in revenue and lower debt service. However, this may be constrained by increased election spending and a shift to higher CAPEX.
We are forecasting that Nigeria’s year-on-year headline inflation will slide to 15.89% in October. This is a marginal decline of 0.09% from September’s rate of 15.98%. We also expect month-on-month inflation to moderate to 0.74% (9.31% annualized) from 0.78% (9.84% annualized) in September.
A continuing trend of slowing inflation will be music to the ears of the economic management team, who have insisted that the economy is beginning to recover from its sharpest downturn in decades.
We expect that headline inflation would bottom out in October. This is because consumer prices typically rise as aggregate demand for goods and services increase as the festive season kicks off.
In the attached bulletin, the FDC Think-Tank analyses inflationary pressures in the economy.
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