November 15, 2024/CSL Research
The Central Bank of Nigeria (CBN) recently published its October 2024 Inflation Expectation Survey, capturing perspectives from households and businesses across the country. The survey reveals that a majority of respondents perceive the current inflation rate as high. Notably, 83.5% of household respondents believe inflation is high, compared to 68.9% of surveyed businesses who share this view. Overall, 76.1% of all respondents rate inflation as high, while 11.1% consider it moderate, and 12.8% perceive it as low.
Across business types, there is a general consensus that the current inflation rate is high, with micro businesses expressing the strongest perception. Regarding factors driving inflation perceptions, energy costs rank as the top driver for both firms and households, with an overall score of 91.1%. Transportation costs and exchange rates follow as the second and third most significant drivers, with perception scores of 89.2% and 87.8%, respectively.
Most respondents from both businesses and households expect inflation to ease over the next six months from October 2024. This optimism is particularly strong among business respondents, with 33% anticipating lower inflation in six months. Overall, 26% of all respondents expect inflation to decline within the next six months. Reflecting this anticipated easing of inflation, 53.8% of respondents plan to increase their spending in the coming months. Additionally, 67.5% of respondents support a reduction in interest rates by the Central Bank of Nigeria (CBN), while 32.8% believe that CBN announcements significantly impact inflation.
We project headline inflation to increase again to 33.46% in October 2024 following the reversal in downward trend seen in September. For core inflation, it is expected that the lagged effect of the recent increases in petrol pump prices and the continued depreciation of the Naira in the period would exert upward pressure, contributing to a m/m increase. Similarly, the sustained effect of the September floods in the Northern region coupled with the rise in transportation costs will impact food prices, and by proxy food inflation.
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