Nigeria’s rate of inflation declines sharply amid monetary policy tightening–CBN

National Bureau of Statistics NBS has said that in the month of October 2023, headline inflation rate increased to 27.33% relative to the September 2023 headline inflation rate which was 26.72%. Looking at the movement, the October 2023 headline inflation rate showed an increase of 0.61% points when compared to the September 2023 headline inflation rate. Furthermore, on a year-on-year basis, the headline inflation rate was 6.24% points higher compared to the rate recorded in October 2022, which was (21.09%). This shows that the headline inflation rate (year-on-year basis) increased in October 2023 when compared to the same month in the preceding year (i.e., October 2022). Inflation in the country rose for the tenth month in a row in October, increasing pressure on the new central bank governor to raise interest rates when the monetary policy committee meets for the first time since his appointment.

Meanwhile, Nigeria’s headline inflation rate, on a month-on-month basis, in October 2023, stood at 1.73%, 0.37% lower than the rate recorded in September 2023.  In a chat with newsmen in Abuja, on Wednesday, November 15, 2023, on the latest NBS figures, the spokesman of the Central Bank of Nigeria (CBN), Dr. Isa AbdulMumin, expressed optimism that the low rate of increase in the average price level in October compared to September 2023, was a pointer to the fact that the Bank’s monetary policy stance to tighten rates and its money market reforms were yielding the desired effect. Aggressive monetary tightening using various liquidity mechanisms including removing the cap on the Standing Deposit Facility (SDF) and Open Market Operations had raised Open Buy Back (OBB) rates from less than 1% in August to their expected levels around the monetary policy rate today In spite of 0.61% increase in the headline inflation rate from 26.72% in September 2023 to 27.33% in October 2023, Isa remained upbeat that the CBN was headed in the desired direction in terms of achieving price stability.

According to him, available statistics showed that the first indication of deceleration in prices was recorded in September and further reforms in the money market, which commenced in October, had accelerated easing in prices as indicated by the substantial drop in month-on-month changes recorded in October. “Moderation in month-on-month changes in prices observed in the headline, food and core components of the consumer basket followed reforms in the money market and relative stability in the FX market,” he added.