In Nigeria, inflation shoots up again

Cornelia Mascio
Ottobre 16, 2020

"It's made a very clear cyclical upturn", the Economic Cycle Research Institute co-founder told CNBC's "Trading Nation" on Wednesday.

He shows the trend in a special chart of his US future inflation gauge, a proprietary leading indicator, and core CPI.

According to Achuthan, the future inflation gauge bottomed five months ago. Interestingly, he didn't sound that negative regarding the inflation resurgence.

He noted that it was quite persistent, pervasive, and pronounced, along the toplines of the gauge for future inflation. "The fact that it's still rising means there's no fresh downturn in this cyclical upturn in inflation". And, that's good information to have. Also, the federal government's most recent data signalled inflation too.

Is the Inflation going to be harmful?

The National Bureau of Statistics disclosed this in its Consumer Price Index report for September on Thursday.

Pork prices, one of the key drivers of inflation over the past year amid pork supply shortages caused by the African swine fever crisis, rose 25.5% year-on-year in September, the second consecutive monthly moderation and down from 85.7% growth in July.

The highest increase recorded in food prices
The highest increase recorded in food prices

The percentage change in the average composite CPI for the twelve months period ending September 2020 over the average of the CPI for the previous twelve months period was 12.44 percent, showing 0.21 percent point from 12.23 percent recorded in August 2020.

The inflation has been coming in from the goods- and maybe construction and manufacturing sectors.

China's industrial deflation continued in September the producer price index fell 2.1% from a year earlier, the National Bureau of Statistics said, slightly deeper than the 2.0% reading in August (which was the lowest since March when the PPI fell 1.5%). According to his indicators, the economy is on the road to recovery for the next couple of months.

"When you add it all up, the leading indicators are pointing to a continued business cycle recovery even without some imminent stimulus", he said.

Yet, he acknowledges the potential impact of gridlock is on his watch list, too. He believes that inflation might become an issue if the lead indicators start faltering, or get back to where they were.

"It is possible that the economic recovery in the fourth quarter may not be as strong as it has been in the third quarter". On the other hand, it might give it a significant boost to the economy.

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