The Managing Director of Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has expressed confidence that the current inflationary trend might be heading towards a point of inflection.
Points of inflection are important in understanding the behavior of functions and curves, especially in applications like physics, engineering, and economics.
They can indicate changes in the rate of growth or decay of a quantity, or shifts in the direction of a process.
“As widely anticipated, headline inflation increased to 34.80 per cent from 34.60 per cent, but at a slower pace than expected. The economic consensus had projected inflation above 35 per cent.
_The question, therefore, is why this slowdown from 0.72 per cent to 0.20 per cent? However, if this trend continues, it would be safe to say that inflation is approaching a point of inflection. This also suggests that the originally anticipated inflation moderation trajectory will be achievable”, said Rewane.
According to him, surprisingly, food inflation, a major culprit of inflation, fell to 39.84 per cent from 39.93 per cent in November—the first decline since August.
Principally, the items in the basket that were affected include rice, yam, bread, fish, beer, etc. This increase was hardly impacted by the early arrival of some of the duty waiver commodities.
“Month-on-month inflation, which provides a clearer picture of inflationary pressure compared to headline inflation, dipped to 2.44 per cent (annualized at 33.51 per cent) from 2.64 per cent. Paradoxically, core inflation (which excludes volatile items such as food and energy) rose by 0.53% to 29.28 per cent from 28.75 per cent, contrasting with the slower rise in headline inflation. “This disparity highlights the prominence of structural factors—such as supply chain disruptions and exchange rate volatility—driving inflation rather than transient factors”, said Rewane.