Director and Chief Investment Officer at MDU Capital Limited, Robert Omotunde, says Nigeria’s inflation is generally trending downward, following improved macroeconomic stability and recent economic reforms.
Speaking during an interview with ARISE NEWS on Tuesday, Omotunde said the decline in headline inflation to 15.43 percent indicates a sustained downward trend, describing the latest figure as a better result than many had expected.
“The downward trend in inflation, which has now brought us to the current level at 15.43 percent. Yes, we’ve been here at 15 levels, from 15.93 to 15.91. And now I think this is even a better result than most people expected.”
He said the decline is encouraging, but stressed that the ultimate objective should be to ensure that improved macroeconomic stability translates into better living conditions for Nigerians.
“Now, the major thing to now think through this is how will the current macroeconomic stability now translate to positive welfare for the majority of the people?”
Omotunde identified food prices as a major factor influencing headline inflation, pointing to seasonal changes, insecurity and supply-side constraints as factors that continue to put pressure on food costs.
“Food is major, right? And to the degree that that is being affected, we continue to see that pressure on headline inflation.”
He explained that food prices could become volatile when previous harvests have been exhausted and new supplies have yet to fully enter the market.
“You will typically see that volatility occurring.”
Omotunde also noted that the official inflation rate may not fully reflect the experience of individual households, particularly low-income earners who spend a large proportion of their income on food.
“We need to start talking about personal inflation, right, beyond the headline.”
He explained that while headline inflation is 15.43 percent, households that devote most of their income to food could experience a considerably higher rate.
“But the guy that spends 90% of his income on food, his inflation is closer to 20% where food inflation is.”
On the foreign exchange market, Omotunde said improved FX management and reduced naira volatility were also supporting the downward movement in inflation.
He said greater transparency in the foreign exchange market could help reduce volatility and support further stability in the naira.
“What you would expect, if that transparency is sustained, is that we now see a much less volatile currency.”
Omotunde added that sustained currency stability could help restore investor confidence and support broader economic recovery.
“Sustained currency stability could help restore investor confidence and support economic recovery.”
On the inflation outlook, he said he does not expect inflation to return to the 17 percent range in the near term, although food prices and external developments remain potential risks.
“I think that we are not likely going to see a spike that could take us towards the 17% territory.”
He said inflation could remain around 15 percent or slightly lower for the rest of the year, provided there are no major shocks to the economy.
“Perhaps we could stay within the 15 or slightly lower 15% region, in the coming days, at least for the rest of the year, until we begin to see other pressure points.”
Omotunde, however, warned that a significant rise in global oil prices could create additional inflationary pressure through higher petrol and electricity costs.
“The moment you begin to see any major spike that takes oil beyond, above $100, right? And of course you will see repricing of oil price, of petrol.”
He said Nigeria is in a better position following the reforms implemented by the government, but stressed that the reforms must ultimately translate into broad-based prosperity for citizens.
“Nigeria’s in a good place, right? Because of all the reforms that we have been able to take.”
According to him, the major challenge is ensuring that economic reforms improve citizens’ welfare through stronger economic growth, job creation and increased investment.
“The major challenge we are having is how these reforms will translate into broad-based prosperity, so to speak, for the citizens.”
Omotunde added that Nigeria needs to sustain the reforms and attract more foreign direct investment to create jobs, improve living standards and strengthen the economy.
“We need to sustain it, to get more capital to come in, especially on the foreign direct investment side, because that will create more jobs, that will increase the general welfare of the people, and of course, the economy will become much more prosperous.”
Goodness Anunobi
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