Highlights

As anticipated in our previous report, Headline Inflation levels printed higher in October 2024. According to National Bureau of Statistics (NBS), Headline Inflation rose to 33.88% year-on-year, up from 32.70% in September 2024. On a month-on-month basis, Headline Inflation also climbed to 2.64% in October, compared to 2.52% in September, reaching its highest level since March 2024.

The sharp increase in Food Inflation was a key factor in the overall rise in Headline Inflation. Compared to September 2024, Food Inflation accelerated to 39.16% year-on-year, up from 37.77%. On a month-to-month basis, Food Inflation climbed by 12 basis points to 2.64%, from 2.52% in September.

Core Inflation followed a similar upward trajectory, rising to 28.37% year-on-year, compared to 27.43% in September 2024. Month-on-month, Core Inflation also edged higher, reaching 2.14%, up from 2.10% in September

Outlook

The Nigerian National Petroleum Corporation (NNPC) raised the price of Premium Motor Spirit (PMS) to N1,025 per litre as of October 30, 2024. This latest increase is anticipated to intensify inflationary pressures for the remainder of the year as elevated transportation and energy costs will likely push operational expenses higher for businesses, leading to higher prices of goods and services for consumers. Overall, we project that headline inflation will reach 34.72% in November 2024.

Policy Implications

The Monetary Policy Committee (MPC) is scheduled to convene on November 25 and 26, 2024, and we expect the Committee to adopt a 25 – 50 basis point increase in the Monetary Policy Rate (MPR). While the impact of the rate hikes on the cost of capital for Companies remains a concern, our outlook for the MPR is underpinned by the monetary policy committee’s reiterated commitment to curbing inflation and narrowing the negative real return.

Click here “October 2024 Inflation – Food Inflation Remains Elevated Amid Supply Chain Disruptions” to view the full report.