Inflation rises to two-year high at 9.4%

In from Success Allantee . . .
Many analysts said they expected inflation rate to increase successively in the period ahead as the National Bureau of Statistics (NBS) on Wednesday announced that inflation rose to 9.4 per cent in September from 9.3 per cent in August.
The September increase was the eighth rise in the past nine months and the highest over a two-year period. The September increase also marked the fourth month that inflation has overshot Central Bank of Nigeria (CBN)’s target. The apex bank has set a band of between six per cent and nine per cent for inflation.
NBS indicated that the core inflation rate, which excludes agricultural products, fell to 8.9 per cent in September from 9.0 per cent in August while the food inflation rose from 10.1 per cent to 10.2 per cent.
Many analysts expected the inflation rate to rise further in the months ahead. FSDH Merchant Bank and Financial Derivatives Company (FDC), which had correctly predicted inflation rise to 9.4 per cent in September, said they expected inflation to remain on the upward curve.
FDC noted that the current inflationary trends seem to be more structural despite CBN’s position in its July communiqué that the inflationary pressures were transient.
“With the cabinet set to take their portfolios in a few days, the Nigerian economy will be shifting from safe mode to active. We are therefore expecting that inflationary pressures that have been relatively benign will become more potent,” FDC stated
FSDH Merchant Bank said it expected the October 2015 inflation rate to increase further.
“Looking ahead, the inflation rate for the month of October 2015 is expected to be higher than the September 2015 figure,” FSDH Merchant Bank stated.

Read also: Inflation goes to 9.3% –NBS report

Analysts at FDC said the primary catalysts of price inflation in Nigeria are cost-push factors, which are being intensified by the restriction of dollars for some critical inputs.
Analysts however noted that the recent release of the President Muhammadu Buhari’s ministerial list may help to ease investor uncertainty pointing out that though the new cabinet did not stir up much enthusiasm, the stable environment created by revealing the President’s team will help foster positive investor sentiment.
“There has still been rising inflation despite shrinking money supply. Though the reduction in Cash Reserve Requirement (CRR) is expected to lead to increased money supply, there will not be a significant rise in money supply in the near future and its effect will be noticed in the coming months. We expect inflation to keep on rising till the end of the year due to higher spending during Christmas celebrations,” FDC concluded.

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