Nigeria Inflation Flattens Out at 16%

As widely anticipated, Nigeria’s headline inflation declined marginally to 15.98% in September from 16.01% in August. This 0.03% decrease in year-on-year inflation marks the eight consecutive month of decline in 2017. Food and core inflation moved in opposite directions in the month of September. In line with headline inflation, month-on-month inflation also eased to 0.78% (9.84% annualized) in September from 0.97% (12.28% annualized). The availability of dollars in the forex market saw major manufacturers benefit from the import of raw materials, although this is yet to be fully passed through to the market, Proshareng.com reported. Fundamentally, inflation in Nigeria is moderating, but could swing upwards if there is a surge in money supply and wages increase sharply. So far in 2017, M2 has contracted by 11.06% but the velocity of circulation has increased. Food inflation was higher by 9 basis points to 20.32% in September from 20.25% the previous month, making it the highest so far in 2017. The core sub-index resumed its downward trajectory, declining to 12.10% in September from 12.3% in August.