As widely anticipated, Nigeria’s headline inflation spiked past the 14% threshold in October reaching 14.23%. This is 0.52% higher than the September level of 13.71%. Nigeria is now one of the few African countries that have an annual inflation higher than 14%. Inflation is now at a 32-month peak having only breached this level in February 2018.
Whilst most analysts expected a spike due to the disruption of the EndSARS protests, not many envisaged that all the key baskets will jump to this level. In October, core, food, urban, rural and monthly inflation all skyrocketed. This has made many to fear that Nigeria might be approaching an era of hyperinflation especially with the recent 6.25% increase in the pump price of fuel (PMS) to N170/liter. The fact that core inflation, which is the price level adjusted for seasonalities accelerated faster than headline inflation suggests that this price increase is not festive season (Xmas) induced.
The MPC will be meeting to consider the monetary policy stance that would be an appropriate response to the twin challenges of rising inflation and an embattled currency. It is widely believed that the MPC will leave the policy rate unchanged at this meeting ostensibly to allow the policy decisions at the last meeting to make a tangible impact on economic indicators and agents.
In the publication, the FDC Think Tank shares its thoughts on the impact of October’s inflation numbers on the economy and MPC’s decision.
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