Nigeria’s official inflation rate continued its downward trend in October, falling to 15.99% from 16.63% in September. Most analysts had anticipated a slowdown but the quantum of decline was much higher than expected. The consensus forecasts ranged between 16.2%-16.4%. The sustained moderation in inflation is largely due to base year effects.
Data Vs Market Reality
Nigeria’s inflation continues to run contrary to market reality. In the last year, the average price of commodities surged by over 50% due to exchange rate pass through, supply chain disruptions, money supply saturation, higher energy and logistics costs. The naira lost 18.4% in the parallel market to trade at N547/$ from N462/$ in Oct’20.
MPC to hold its fire at the next meeting
The MPC has maintained status quo in 24 of the last 28 meetings. With the current trend of slowing inflation, we expect the committee to leave all policy parameters unchanged at its meeting next week.
In the download, the FDC Think Tank shares its thoughts on the impact of October’s inflation numbers on the economy.
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