Analysts Forecast Further Drop in Inflation

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Obinna Chima

Analysts at FSDH Merchant Bank Limited have predicted that inflation rate (year-on-year) will drop to 13.49 per cent in March 2018, from the 14.33 per cent recorded in February.

The firm, which stated this in a report obtained yesterday, pointed out that the anticipated drop in inflation rate is premised on the base effect of higher prices in the Composite Consumer Price Index (CCPI) in March 2017 than the current month.

The National Bureau of Statistics (NBS) is expected to release the inflation rate for March on 16 April, based on the data release calendar on the website of the NBS.

The latest monthly Food Price Index (FPI) from the Food and Agriculture Organisation (FAO) released yesterday, showed that the index was up 1.05 per cent to 172.8 points in March, from the revised value for February.

The increase recorded in the FPI was because of a strong recovery in dairy and cereal prices.

The FAO Dairy Price Index appreciated by 3.26per cent in March as prices of butter, Whole Milk Powder (WMP) and cheese were on the increase. The increase was mainly supported by strong global import demand and lower than expected milk output.

On the flip side, the FAO Sugar Price Index dropped by 3.4 per cent. The drop in the index is on the heels of favourable supply conditions in the main sugar producing regions, and a weaker Brazilian Real.

“Our analysis indicates that the value of the naira remained stable at the parallel market while it appreciated at the interbank market by 0.08 per cent to close at $/N305.65 from $/N305.90 at the end of February,”it added.

The report noted that the appreciation recorded at the interbank market between the two months under review moderated the impact of the imported consumer good prices in the domestic market.

It also stated that the prices of most of the food items monitored by the firm in March 2018 recorded moderate appreciation, leading to 1.12 per cent increase in our Food and Non-Alcoholic Index.

“The Index increased by 16.31 per cent from 229.71 points recorded in March 2017. We also noticed increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between February and March.

“We estimate that the increase in the CCPI in March would produce an inflation rate of 13.49per cent lower than the 14.33 per cent recorded in February,” it added.