Nigeria’s Inflation Expected to Slow in February as Food Supply Improves – Analysts

Analysts at Financial Derivatives Company (FDC) have projected a further slowdown in Nigeria’s inflation in February, citing improved food supply and easing price pressures across key sectors. The Consumer Price Index (CPI) data, due for release this week, is expected to show headline inflation moderating to 14.07 per cent, down from 15.10 per cent in January.

In January, inflation had already declined slightly from 15.15 per cent to 15.10 per cent, marking the tenth consecutive monthly fall and reaching the lowest level since November 2020. Food inflation eased to 8.89 per cent, while core inflation—covering non-food items—moderated to 17.72 per cent, the lowest since October 2022.

FDC attributed the projected slowdown to a relatively stable exchange rate, which helped reduce prices for imported commodities. Analysts also pointed to increased food supply and consumers’ resistance to rising prices, driven by tighter disposable incomes, as key factors supporting the moderation of inflation across all sub-indices.

However, FDC warned that global uncertainties, particularly the conflict in the Middle East, could alter this trajectory. Petrol prices jumped 46.9 per cent to N1,232 per litre and diesel surged 52.5 per cent to N1,510 per litre, potentially impacting commodity prices, distribution costs, and overall production expenses. The analysts cautioned that if the conflict continues beyond two months, the effects on inflation and economic activity could be significant.

Looking ahead, global monetary policies may also influence Nigeria’s economic decisions. Analysts noted that major central banks, including the Federal Reserve and the Bank of England, are expected to maintain steady interest rates in response to global shocks. This could lead the Central Bank of Nigeria to adopt a similar wait-and-see approach at its May Monetary Policy Committee meeting.

source: Leadership