FSDH ex­pects 11.69% De­cem­ber 2018 in­fla­tion rate

… Macroafricain­tel fore­casts 11.5-12 %

Business Day (Nigeria) - - NEWS - BUNMI BAI­LEY

De­cem­ber’s 2018 Con­sumer Price In­dex (CPI), oth­er­wise re­ferred to as in­fla­tion rate, is fore­casted to rise to 11.69 per­cent from 11.28 per­cent recorded in Novem­ber, ac­cord­ing to a re­port by FSDH Mer­chant Bank Lim­ited.

But Macroafricain­tel, an­other re­search house sees in­fla­tion ris­ing to as high as 12 per­cent for the same pe­riod.

FSDH’S ex­pected monthly in­crease of 0.41 per­cent points be­tween the two months is the high­est monthly in­crease since Novem­ber 2016, the re­port said.

Ayo Ak­in­wunmi, head of re­search, FSDH Mer­chant Bank, ex­plained, “The in­crease in the prices of food items and non­food items of the high ve­loc­ity of end of the year pur­chases drove up prices of con­sumer food items.”

Rafiq Raji, chief econ­o­mist at Macroafricain­tel, a re­search firm, ex­pects in­fla­tion in De­cem­ber to to rise to 11.5-12 per­cent.

“My Fore­cast is based on the re­cent monthly change trend and typ­i­cal price in­creases dur­ing fes­tive pe­ri­ods, said Raji. “But it is likely in the mid­dle of these ranges of fore­casts. The ac­tual in­fla­tion head­line would prob­a­bly be within the 11.5-12 per­cent range, in my view.”

The Na­tional Bureau of Sta­tis­tics is sched­uled to re­lease the in­fla­tion rate for the month of De­cem­ber on Thurs­day 17, Jan­uary 2019.

Prices of ma­jor food items start to rise dur­ing or in the run-up to the fes­tive pe­ri­ods. Ibrahim Ta­judeem, head of re­search, Chapel Hill Den­ham, said the fore­cast could be higher due to the fes­tive-pe­riod in­duced spend­ing, which would lift in­fla­tion. “Ad­di­tion­ally, de­mand for dol­lar in­creased in De­cem­ber due to the fes­tive sea­son so the Cen­tral Bank of Nige­ria (CBN) had to sup­ply more dol­lars for peo­ple to travel and spend .So de­mand gen­er­ally was strong in de­mand.”

The Food Price In­dex (FPI) re­port re­leased on Jan­uary 10, 2019 by the Food and Agri­cul­ture Or­ga­ni­za­tion (FAO) for the month of De­cem­ber 2018 re­mained rel­a­tively the same as Novem­ber 2018.

How­ever, the World Bank has hinted at a pos­si­ble in­crease in food prices in 2019 be­cause of se­vere weather con­di­tions, may ac­cel­er­ate the in­fla­tion rate in 2019 in Nige­ria.

The FAO notes that the de­cline in the prices of dairy and sugar in De­cem­ber was largely off­set by the in­creases in ce­real, meat and oils.

The FSDH re­port noted that de­spite the ex­pected in­crease in the in­fla­tion rate in De­cem­ber 2018 and in 2019, FSDH Re­search be­lieves mem­bers of the Mon­e­tary Pol­icy Com­mit­tee (MPC) of the CBN will vote to hold rates at the cur­rent lev­els in Jan­uary 2019.

“The most ap­pro­pri­ate in­stru­ment to sig­nal tight­en­ing at the mo­ment in the face of frag­ile credit and eco­nomic growth is to use open mar­ket op­er­a­tions (OMO) to mop up ex­cess liq­uid­ity,” the re­port stated.

The MPC, which has the re­spon­si­bil­ity to for­mu­late the coun­try’s mon­e­tary and credit pol­icy, is sched­uled to hold the first meet­ing for the year in Jan­uary 21-22, 2019.

L-R: Charles Ebere­onwu, ex­ter­nal re­la­tions man­ager, To­tal Ex­plo­ration and Pro­duc­tion Nige­ria Lim­ited; Ozena Utulu, head, brand man­age­ment and sus­tain­abil­ity cor­po­rate com­mu­ni­ca­tions; Joseph Uboh, Her­itage Bank fi­nance and ad­min man­ager, and Queen Uboh, pres­i­dent, Para-power Lift­ing of Nige­ria, dur­ing the me­dia par­ley by the or­gan­is­ing com­mit­tee of the In­ter­na­tional ParaPow­er­lift­ing com­pe­ti­tion com­ing up later this month in La­gos. Pic by Pius Okeo­sisi

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