SEPTEMBER INFLATION SURGE LOOMS AS ANALYSTS EYE RISING PETROL PRICES
Overview: As Nigeria braces for the release of official inflation data, economic analysts predict a rise in inflation rates for September, driven by increased petrol prices and foreign exchange market instability. This inflation spike presents a challenge for Central Bank of Nigeria (CBN) Governor Yemi Cardoso, who has already implemented five benchmark interest rate hikes in his first year to combat inflation, now totaling a significant 27.25%.
Key Points:
1. Monetary Tightening Efforts: Cardoso and the Monetary Policy Committee (MPC) have focused on raising interest rates to tackle inflation caused by excessive government spending. Despite these efforts, external factors like fuel price hikes and flooding are expected to push September’s inflation rate to around 32.3%.
2. Impact of Rising Petrol Prices: Petrol prices, which rose from N597 to N855 per liter in September, have played a significant role in pushing up inflation. Analysts expect this to affect core inflation and anticipate a continued rise in food prices despite the ongoing harvest season.
3. Flooding and Food Inflation: Flooding and poor harvests have worsened food inflation, but the impact of higher petrol prices on food transportation has been somewhat mitigated due to the use of diesel-powered agro-machinery.
4. Inflationary Pressure and Foreign Exchange Volatility: The depreciation of the naira and foreign exchange instability further compound the inflationary pressures. Nigeria’s external reserves and the influx of foreign investments have failed to stabilize the currency, with the naira losing 70% of its value under President Bola Tinubu’s administration.
Overview: As Nigeria braces for the release of official inflation data, economic analysts predict a rise in inflation rates for September, driven by increased petrol prices and foreign exchange market instability. This inflation spike presents a challenge for Central Bank of Nigeria (CBN) Governor Yemi Cardoso, who has already implemented five benchmark interest rate hikes in his first year to combat inflation, now totaling a significant 27.25%.
Key Points:
1. Monetary Tightening Efforts: Cardoso and the Monetary Policy Committee (MPC) have focused on raising interest rates to tackle inflation caused by excessive government spending. Despite these efforts, external factors like fuel price hikes and flooding are expected to push September’s inflation rate to around 32.3%.
2. Impact of Rising Petrol Prices: Petrol prices, which rose from N597 to N855 per liter in September, have played a significant role in pushing up inflation. Analysts expect this to affect core inflation and anticipate a continued rise in food prices despite the ongoing harvest season.
3. Flooding and Food Inflation: Flooding and poor harvests have worsened food inflation, but the impact of higher petrol prices on food transportation has been somewhat mitigated due to the use of diesel-powered agro-machinery.
4. Inflationary Pressure and Foreign Exchange Volatility: The depreciation of the naira and foreign exchange instability further compound the inflationary pressures. Nigeria’s external reserves and the influx of foreign investments have failed to stabilize the currency, with the naira losing 70% of its value under President Bola Tinubu’s administration.