Nigeria Economy | |
Nigeria Economy | |
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Wednesday,
October 11, 2017 11:39 AM /FDC
Headline
inflation is expected to decline to 15.99% from 16.01% in August, making it the
eight consecutive monthly decline in 2017. We noticed a widespread ease in food
commodity prices, usually associated with early harvest.
We
believe the threat of higher inflation is looming with the commencement of the
electoral cycle. This is because the incumbent government will roll out a
series of people-friendly disbursements and initiatives.
We are projecting a slight decline in year-on-year headline
inflation to 15.99% in September. This is a 0.02% decrease from the previous
month, making it the eight consecutive monthly decline in 2017. This sustained
but marginal reduction can be partially attributed to the effect of tight
liquidity in the system, evidenced by a contraction in money supply by 11.06%
to N21.85trn in August. We noticed a widespread ease in commodity prices,
usually associated with early harvest.
We
also expect month-on-month inflation to decline to a one year low of 0.81%
(10.16% annualized) from 0.97% (12.28% annualized) in August. This reduction is
partially due to a slight appreciation of the naira and availability of forex
in the market during the period under review. This has been complemented by an
improvement in power supply, which increased from an average of 3,352.97MW/hr
to 3,432.97MW/hr in September. On the negative side, diesel price peaked at
N190/liter during the month.
Inflationary
pressure eased within the SSA, as inflation averaged 13.1% partly due to policy
changes, increased output and a reduction in petrol prices. Most Central Banks
have held rates to prevent the risk of inflation. Like other SSA peers, Nigeria
has used tight monetary policies to ensure price stability.
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