Analysis

January 2024 Headline Inflation nudged higher to 29.90% from 28.92% in December 2023, thereby reaching a new record high in 27 years. This increment elucidates a heightened rise in the average price level for January 2024 relative to the increase noted in December 2023, highlighting the growing inflationary pressures within the nation’s economy. On a month-on-month basis, Headline Inflation rose by 2.64% from 2.29% in December 2023.

Outlook

We expect Headline Inflation to remain high as a result of the sizeable depreciation of the Naira in the official window. If the naira keeps depreciating, we expect PMS price to be adjusted in the near term. This will in turn fuel further uptick in prices, which are expected to take a hit from the disruption of dry season cultivation activities in food-producing regions.

Policy Expectation

As the next MPC meeting approaches, scheduled for February 26-27, 2024, we expect effective communication and clarification of the committee’s stance and monetary policy objectives, particularly with regard to ensuring financial system stability. Such clarification would be instrumental in bolstering investor confidence. The MPC’s actions and communication in the upcoming meeting will play a vital role in shaping investor sentiment and guiding economic outcomes.

Click here “January 2024 Inflation – Inflationary Pressure Continues to Bite Harder” to view the full report.