According to forecasts from Cordros Capital Research, Nigeria’s inflation rate is expected to soar to 32.77 percent this month due to rising food costs and harvest depletion.
The company projects a 3.29 percent monthly increase in food inflation, highlighting the ongoing pressure on prices in the country’s food industry.
According to forecasts from Cordros Capital Research, Nigeria’s inflation rate is expected to soar to 32.77 percent this month due to rising food costs and harvest depletion.
The company projects a 3.29 percent monthly increase in food inflation, highlighting the ongoing pressure on prices in the country’s food industry.
The nation had a notable increase in inflation in February, with the headline rate rising from 29.9 percent in January to 31.7 percent year over year, an increase of 1.80 percentage points.
Reduced food availability, continuous currency devaluation, and skyrocketing energy prices have all been blamed for this inflation increase, which has been made worse by adverse base effects from the prior year.
The growing cost of goods, especially the food basket, draws attention to how difficult it is to maintain a balance between supply and demand in the market.
Pressure on prices is increasing as the agricultural industry tries to fulfill the expanding demands of the populace, raising Nigerians’ overall cost of living.
There are calls for strategic measures to stop the rising expenses and lessen the financial burden on individuals as a result of Nigeria’s persistent inflationary trend, which raises serious worries for the country’s economic stability and household welfare.
In order to lessen the country’s inflationary pressures, the government and pertinent stakeholders are under pressure to put into place efficient policies that would guarantee a continuous supply of food and other necessities, stabilize the currency, and control energy prices.
They said, “We highlight broad-based pressures across the food and core baskets. Precisely, food inflation (+251bps to 37.92 per cent y/y) remained at a 19-year high, while the core inflation (+154bps to 25.13 per cent y/y) settled at the highest level since March 2004 (32.6 per cent). On a month-on-month basis, consumer prices surged by 48bps to 3.12 per cent (January: +2.64 per cent m/m), the highest point in six months.
“On our outlook, we identify the CBN’s efforts to stabilize the naira, recognizing the high pass-through effect on domestic prices. These efforts include improved dollar supply from the CBN to the forex market, monetary tightening, and higher domestic interest rates.”
Based on the previously indicated information, analysts projected that the naira would be less volatile this month than it had been in recent months, which would lessen the effect of currency volatility on price rises in March.
As a result, analysts projected that core inflation in March would print lower by 10 basis points, or 1.98 percent MoM.
On the other hand, they anticipated that harvest depletion would maintain pricing pressures within the food basket, resulting in a 3.29 percent MoM increase in food inflation.
In general, we expect headline inflation to come in at 2.69 percent MoM, which would mean a 107-bps YoY increase to 32.77 percent.
“The recently released data by the National Bureau of Statistics (NBS), which indicated that collections from the Company’s Income Tax (CIT) increased by 49.9 per cent YoY to N1.13 trillion in Q4, 2023 (Q4, 2022 N753.88 billion), bringing the total CIT collection to N4.90 trillion in 2023 full year (FY) (2022FY, N2.83 trillion), the experts noted that the increase was due to broad-based growth across foreign CIT payments (+49.0 YoY to N596.1 billion) and local collections (+50.9 per cent YoY to N533.93 billion), in addition to currency depreciation which also supported the substantial increase in foreign collections.”
The expert did point out that the impact of the negative macro economy on corporate profitability caused the CIT collection to decrease by 35.4% on a quarter-over-quarter basis in Q4, 23 (compared to Q3, 2023: +13 percent q/q to N1.75 trillion).
“Going ahead, we anticipate a rise in CIT collections in the near future in accordance with the tax provisions of the 2023 Finance Act and Fiscal Policy initiatives,” they continued.
However, we foresee several significant risks, such as low consumer demand, high energy costs, and FX illiquidity, which may have a negative impact on corporate earnings and CIT collections in the near to medium run.
