Researchers predict single-digit inflation rate by June

Experts at FSDH Merchant Bank Limited have envisaged a drop of the inflation rate to a single-digit by mid-year.

The firm stated this in its monthly economic and financial markets outlook report where it observed improvement in growth prospect but uncertainties still remain.

Head of Research, Ayodele Akinwunmi who gave insight into the outlook during a press conference yesterday said the declining inflation rate may lead to a further drop in the yields on fixed income securities, particularly at the short-end of the yield curve.

He said, “We expect inflation rate to drop to single digit in July 2018, provided there is no adjustment to the price of Premium Motor Spirit (PMS), electricity tariff, and government resolve to stop the rising crises in some parts of the country quickly.”

On the Monetary Policy Committee (MPC) meeting held last week where the rates were retained, the firm further stressed the need for the Central Bank of Nigeria (CBN) to deploy measures that will inject additional funds to the financial system to enable bank increase credit creation to stimulate growth.

Despite the improvement in the economy, Akinwunmi said there are challenges like the rising problem in the Middle Belt, the hike in petrol price, saying there is likelihood of subsidy rising to N700 billion.

He noted the presence of investors’ confidence in the economy, stability in the foreign exchange market, improvement in oil revenue adding that the second quarter of 2018 would be much rewarding.

He however advised investors to invest stocks that have “strong fundamentals.”