August Inflation Predicted to Remain Unchanged

Analysts at FSDH Merchant Bank Limited have predicted that inflation rate (year-on-year) will remain unchanged at 11.14 per cent in August 2018, same rate recorded the previous month.

Although the Lagos-based firm stated that it observed moderation in prices of some food items in August, the contraction in the agriculture sector may place pressure on food prices in coming months.

The National Bureau of Statistics (NBS) will release the inflation rate for August this Friday.

The Food Price Index (FPI) of the Food and Agriculture Organisation (FAO) published in August 2018, had noted that food prices in the international market increased marginally in August from the July levels.

The prices of sugar, edible oil and dairy dropped in August compared with July while the prices of cereal and meat increased.

The depreciation of currencies in Brazil and India against the dollar resulted in the decrease in sugar prices.

However, tight export in wheat and maize forced prices up, the report stated.

“FSDH Research’s analysis indicates that the value of the naira depreciated at both the Nigerian Autonomous Foreign Exchange (NAFEX) and the parallel market at end-August 2018.

“At the NAFEX and parallel markets, the value of the naira depreciated by 0.40 per cent and 0.08 per cent to close at $/N362.65 and $/N306.15 respectively at the end of August. “The marginal increase in the international prices of food coupled with the depreciation in the value of the naira placed an upward

pressure on prices of some consumer goods in August.

“The prices of food items that FSDH Research monitored in August 2018 moved in varying directions. The movement in the prices of food items during the month led to a 1.10 per cent increase in our Food and Non-Alcoholic Index. This Index increased year-on-year by 12.76 per cent, up from 251.66 points recorded in August 2017.”

The firm also observed an increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between July and August 2018.

Therefore, FSDH estimated an increase in the Composite Consumer Price Index (CCPI) in August, which it stated would produce an inflation rate of 11.14 per cent, same as the figure recorded in July.