Dear Subscriber,

The National Bureau of Statistics released the inflation figure for October 2022 today. Headline inflation was at 21.09%, which is 0.32% higher than the month of September (20.77%). The rate of inflation was widely expected to increase by a consensus of analysts. The trend shows that the pace of inflation increases is beginning to show signs of tapering. Many economists were surprised at how mild the surge in prices was after the multiple impacts of floods, currency depreciation, and the higher cost of logistics.

Whilst the price level was partially muted, we expect the cost-push momentum of the inflation-stoking factors to impact the November inflation level. This is believed to be as a result of the inside lag between events and the manifestation of its impact.  Therefore, the effect of an oscillating Naira in October through November will take its toll on prices of imported commodities and festive-related consumption in November.

All told, the temporary and artificial appreciation of the Naira in the forex market has all but faded.  If the Naira slides further than N810/$, it might have major detrimental effects on price stability in the run-up to a monumental election in February.  Most analysts are of the view that the Central Bank is unlikely to make any change to its monetary policy rate in its next meeting holding next week.

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