Inflation is expected to slow further when the National Bureau of Statistics (NBS) release it data next week as a result of favourable farm harvest. Analysts expect the rate moderate down to 7.79 percent. 
The consensus is that the headline inflation will continue its downward trend in the last quarter of the year. The Governor of the Central Bank of Nigeria (CBN), has lowered the inflation target band for 2014 to between six and nine percent and expects low rates for the rest of 2013.
Bismarck Rewane, chief executive officer of Financial Derivatives Company (FDC) limited said FDC’s Headline CPI model supports the new target band for 2014.
“Currently at eight percdnt (according to the NBS) in September, the lowest level since March 2008, FDC expects a further decline in the headline inflation for the third consecutive month in October to 7.79 percent.
“In the month of October, we forecast that the national headline inflation will be 7.79 percent. We attribute the continued moderation in the rate of inflation to the onset of harvest of farm produce as well as moderated prices of imported food as global food commodity prices continue to fall on higher agricultural output”, he said.
The persistent moderation in the headline inflation can also be attributed to the high prices of consumer goods recorded in the base period due to its importance in calculating the year on year inflation rate. In addition, the tight monetary policy regime of the CBN contributed to the comfortable inflation milieu.
As anticipated, the FDC’s Lagos urban year on year (y-o-y) CPI eased by 1.96 percent to 9.73 percent in October 2013. This shows that the impact of the seasonal farm harvests is beginning to influence the urban index as supply of farm produce (food items) outweighs demand. The food basket declined by 2.11 percent in October to 9.80 percent from 11.91 percent in September. The non-food basket declined to 8.50 percent from the previous month’s 8.67 percent.