November 18, 2024/CSL Research

As anticipated, Nigeria’s headline inflation rose to 33.88% in October 2024, marking the second consecutive monthly increase after two months of decline in July and August. This represents an uptick of 1.18 percentage points from the 32.70% y/y recorded in September. Compared with the same period last year, headline inflation increased by 6.55 percentage points compared to 27.33% y/y in October 2023. On a month-on-month basis, headline inflation stood at 2.64% in October 2024, slightly higher than the 2.52% recorded in September.

Food inflation, a key driver of headline inflation, climbed to 39.16% y/y in October, up from 37.77% in September. Month-on-month, food inflation rose by 2.94% in October, an increase of 0.30 percentage points from the 2.64% recorded in September. Core inflation rate, which  excludes volatile food and energy prices, was 28.37% y/y in October, marginally higher than the 27.43% recorded in September. On a month-on-month basis, core inflation rose to 2.14% in October, up slightly from 2.10% in September 2024.

The rise in Food inflation on a m/m basis was attributed to the rate of increase in the average prices of palm oil, vegetable oil, mudfish, croaker, fresh fish, etc (fish class), dried Beef, goat meat, mutton, skin meat, etc (meat class), and Bread, Guinea Corn flour, Plantain flour, Rice, etc (bread and cereals class). We had anticipated a rise in food inflation in October due to recent floods in key food-producing areas of the Northern region, which we expected to counteract the usual price relief brought by the harvest season. Likewise for core inflation, we had expected the lagged effect of the recent increases in petrol pump prices and product scarcity to tick up the energy-dominated index.

Looking ahead, we project headline inflation will rise to 34.71% in November, primarily driven by an expected increase in both food and core inflation. We expect pent up demand ahead of the festive season to pressure headline inflation. The federal government’s efforts to control food inflation will likely be curtailed by the lagged effects of the floods in key food-producing regions and seasonal price increases typically associated with the festive season. On the core inflation front, ongoing fuel scarcity and unstable pump prices in parts of the country are expected to continue exerting upward pressure, compounding the overall inflationary trend.

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