MONEY MATTERS Inflation rate to drop further to 15.64% - FSDH

FSDH Merchant Bank Limited, one of Nigeria’s leading asset management and financial advisory firms, says it expects the June 2017 inflation rate (year-on-year) to drop to 15.64 per cent from 16.25 per cent recorded in May 2017.

FSDH said the increase in the price of food items moderated in June compared with May 2017: “We also observed increases in some divisions that contribute to the Core SubIndex, with the highest price observed in the clothing and footwear divisions,” it added.

Based on the data released on the National Bureau of Statistics (NBS) website, the NBS will release the inflation rate for June 2017 on July 17, 2017.

The monthly Food Price Index (FPI) that the Food and Agriculture Organisation (FAO) released within the week shows that the index advanced further in June 2017. The index averaged 175.2 points, 1.43 per cent higher than the revised value for May 2017, and 6.89 per cent higher than the June 2016 figure.

Movement in the food prices were in varying directions. Dairy, cereal and meat prices were mostly responsible for the uptick in the value of the index while sugar and oil prices depreciated.

On the flip side, the FAO Vegetable Oil Price Index was down by 3.88 per cent, driven by falling quotations for both palm and soy oils. Good production prospects and bumper harvests contributed to the fall in prices.

The naira lost 0.16 per cent to close at N305.90/$ at the interbank market, while it gained 2.96 per cent to close at N371/$ at the parallel market at the end of June 2017. The appreciation of the naira in the parallel market is expected to counter the effect of the rising prices of food at the international market.

It estimates that the increase in the CCPI in June 2017 will produce an inflation rate of 15.64 per cent lower than the 16.25 per cent recorded in May 2017.