It will be a week packed with inflation figures from major economies, including the United States, China and Germany among many others.

But the spotlight shines on Africa’s 4th largest economy – Nigeria.

Inflationary pressures have been cooling in recent months but the latest figure for October is expected to have jumped 33.4%, from 32.7% in September.

This may be the result of fuel hikes and floods in the northern part of the country affecting the harvest season.

The CBN has been on a mission to support the Naira and attract investments using aggressive monetary policy.

Interest rates were raised by 50 basis points to 27.25% in September – marking its fifth consecutive hike in 2024. Should the Naira show signs of stabilizing, annual inflation could peak in the final quarter of this year.

Dollar set for volatile week?

Outside of Nigeria, our attention falls on the US Dollar Index (DXY) which could be rattled by key US data and Fed speeches including Jerome Powell.

Besides, it would be a crime to overlook the index after its aggressively bullish reaction to Trump’s US election win. Prices jumped almost 2% last week Wednesday on the “Trump trade” before giving back post-election gains as the Pound and Yen gained.

Note: The DXY tracks the dollar’s performance against a basket of six different G10 currencies, including the Euro, British Pound, Japanese Yen, and Canadian dollar.

With all the above said, the DXY could see more price swings.

*US October CPI report

The October US Consumer Price Index (CPI) report to be published on Wednesday 13^th November could impact Fed cut expectations around lower US interest rates in December and beyond.

Markets are forecasting: 

• CPI year-on-year (October 2024 vs. October 2023) to rise 2.6% from 2.4%in the prior month
• Core CPI year-on-year to remain unchanged at 3.3%
• CPI month-on-month (October 2024 vs September 2024) to remain unchanged at 0.2%
• Core CPI month-on-month to remain unchanged at 0.3%.

Headline and core CPI inflation is expected to remain unchanged at 0.2% and 0.3% MoM in October, but the year-over-year headline number is expected to rise 2.6% from 2.4%.

Further evidence of cooling price pressures may support the case for another rate cut in December.

Traders are currently pricing in a 65% probability of another 25-basis point rate cut by the end of 2024.

A softer-than-expected US CPI report has the potential to drag the DXY lower. Should the CPI report beat market forecasts, the DXY could push higher.

Oil hit by China demand woes

Oil tumbled last Friday after Chinese stimulus measures disappointed investor expectations.

Brent shed roughly 1.6% last week as renewed concerns about demand in China and uncertainty over the impacts of Trump’s presidency weighed on the global commodity.

Last week, we discussed how Trump’s victory may pressure oil – possibly hitting oil producing nations like Nigeria.

His return to the White House could result in higher domestic oil production while potential tariffs on China may impact global demand.

This combination of rising supply and falling demand could enforce fresh pressures on oil which is down 4% since the start of 2024. Should oil prices continue to weaken, this could be a threat to countries who acquire a chunk of their revenues from oil sales.

The post Week Ahead: Nigeria CPI, USD and Oil in focus appeared first on Tech | Business | Economy.

Commenting on the inflation figure on Tuesday, he said, “It is troubling that we are witnessing a resurgence of high inflationary pressures after some few months of respite despite policy measures to tame inflation, especially on the monetary side. Purchasing power had continued to plunge over the past few months. The situation had been further exacerbated by the surging petrol price.”

Nigeria’s headline inflation rose to 32.70 per cent in September which demonstrated a reverse of the slowing inflation rate in the previous two months of July and August.

The latest Consumer Price Index report from the National Bureau of Statistics shows that inflation figure is a marginal increase of 0.55 per cent from the August 2024 figure of 32.15 per cent, reflecting ongoing price pressures across the country.

Dr. Yusuf attributed the increase in inflation to factors such as the rising cost of petrol, depreciation of the naira, and surging transportation and logistics costs.

He noted, “the reality is that the dynamics driving inflation are yet to be effectively subdued. These factors include the depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy cost, climate change including resultant incidents of flooding, insecurity in farming communities and structural bottlenecks to production.

“These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weakens profitability, and dampens investors’ confidence.”

Yusuf urged the government to provide concessionary import duties for industrialists and prioritise the resolution of critical issues like power supply, logistics, and foreign exchange.

Also, he highlighted the importance of sub-national governments in addressing food inflation by improving rural infrastructure to ease transportation and access to markets.

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