FSDH expects 11.69% December 2018 inflation rate
… Macroafricaintel forecasts 11.5-12 %
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.