After one month drop in year-on-year inflation, Nigeria’s headline inflation is projected to inch up to 11.27% from 11.26% in October. This would be mostly driven by a boost in liquidity, arising from FGN’s increased government disbursements and state payments to contractors. Surprisingly, in the food basket, we observe that the price of tomatoes and pepper declined during the month. However, we expect this decline to be short-lived as prices are expected to rise again as Christmas draws closer.
The naira is coming under pressure in the forex market. It has traded as low as N374/$ before appreciating again to N368/$. Imported inflation will increase on the back of the currency weakness, even though the CBN seems determined to defend the naira. It is also expected that the minimum wage would be resolved before Christmas. This would increase consumers’ disposable income and heighten inflationary pressures.
In the attached bulletin, the FDC Think-Tank is projecting the inflation numbers for November.
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