Dear Subscriber,

The National Bureau of Statistics released Nigeria’s November inflation report today (December 15). Headline inflation rose for the tenth consecutive month to 21.47% in November 2022 from 21.09% recorded in the previous month. Food inflation and core inflation also rose in tandem with the headline inflation rate at 21.43% and 18.24%, respectively. The exchange rate pass-through effect, lingering effects of the flood and higher cost of production due to the astronomical rise in energy costs have kept inflationary pressures high in the country.

Month-on-month inflation in November increased by 0.15% to 1.39% after three consecutive months of decline. This can be attributed to an increase in demand and business activity as the festive season approaches.

Peak Inflation: Are we Already There?

Global inflationary pressures have maintained a downward trend as the year comes to an end. The US inflation rate declined for the fifth straight month in November to 7.1%, lower than the expected 7.3%. Inflation in the Eurozone also slowed for the first time in a year and a half, to 10% in November from a record high of 10.6% in October. Some sub-Saharan African countries, such as Botswana and South Africa, are also experiencing lower inflationary pressures as their inflation rate trends downward.

In Nigeria, however, inflationary pressures appear to be persistent. The effects of exchange rate pass-through, as well as other domestic challenges, continue to fuel inflation in the country. Although the CBN has adopted restrictive measures since May 2022, the money supply and the CBN balance sheet have continued to balloon.

We expect the inflation rate to inch up further and remain elevated in the coming months. The monetary policy committee is also expected to remain hawkish in its monetary policy decision in the near term as the inflation rate remains above its target of 9%.

In the download, the FDC Think Tank shares its thoughts on the inflation report for the month of November.

Enjoy your read…