As widely expected, Nigeria’s headline inflation for November fell for the 8th consecutive month to 15.4%. Cumulatively, Nigeria’s inflation rate has averaged 17.11% in 11M’21, significantly higher than 12.98% in the corresponding period in 2020. The impact of harvest and consumer price resistance have kept Nigeria’s inflation on a downward trend since April 2021.
Nigeria’s inflation trend at variance with global and regional inflation
Major global economies are recording spikes in their inflation rates as supply shortages and high energy costs continue to filter into consumer prices. The US and UK recorded high levels of inflation, with the US’ inflation jumping to a 39-yr high of 6.8% while the UK spiked to a 10-yr high of 5.1%. This has prompted a 15bps increase in the MPR by the BoE, while the US fed plans to increase rates thrice in 2022. The impact of the hawkish monetary stance by developed economies will weigh on the debt service cost of emerging and frontier markets such as Nigeria.
MPC doves may consider a rate cut in January
There would be one more inflation report (for December) released before the MPC’s first meeting in 2022. If the numbers fall further, the doves in the committee may be emboldened to push for an interest rate cut.
In the download and link below, the FDC Think Tank shares its thoughts on the impact of November’s inflation numbers on the economy.
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