Analyst: Softer Food Prices, Stronger Naira May Ease Inflation to 18.8%

Nume Ekeghe

Senior Research Analyst at FXTM, Lukman Otunuga, has projected that Nigeria’s inflation rate could ease to 18.8 per cent year-on-year in September from 20.1 per cent in August, driven by declining food prices and a firmer naira.

Otunuga in a statement noted that while Nigeria’s Consumer Price Index (CPI) will dominate domestic focus this week, global markets are already grappling with renewed risk aversion following escalating US-China trade tensions.

He stated: “A combination of softer food prices and a strengthening naira may have tamed price pressures. Further signs of cooling inflation may pave the way for additional rate cuts by the Central Bank of Nigeria (CBN) in November to stimulate economic growth.”

He explained that a brief post by former US President Donald Trump on Truth Social was “enough to erase almost $2 trillion from US markets last Friday,” after he threatened to impose an additional 100 per cent tariff on Chinese goods starting November 1.

“US equity bulls were slaughtered as the S&P 500 tumbled 2.7 per cent its worst session since April. The pain spread beyond equities with Bitcoin collapsing like a house of cards while safe-haven gold glittered through the chaos,” he said.

“The Trump administration signalled an openness to talk with China, which has slightly eased concerns. Regardless, the damage has already been done,” adding that trade uncertainty comes at a time when investors are already uneasy over the ongoing US government shutdown that began on October 1.

He also pointed to expectations of strong third-quarter earnings from US banks, buoyed by a rebound in investment banking activity, easing regulations, and renewed mergers and acquisitions.

On commodities, Otunuga said gold climbed to a new all-time high above $4,070 per ounce on Monday amid trade tensions, marking its eighth consecutive week of gains and a nearly 55 per cent year-to-date surge.