Analysts project slow inflation rate, 33.24 per cent this month
MONTH- ON- MONTH inflation change is projected to settle at 2.16 per cent in July, translating to 33.24 per cent year- on- year change.
According to Codros Capital Research, the projection is hinged on the prediction that inflationary pressures might have peaked in June and should begin to moderate in July, mainly due to a high statistical base from the prior year and a slower increase in energy prices. Over the years, inflationary pressures have continued to impact the economy, prompting the Central Bank of Nigeria ( CBN) to employ conventional monetary policy tools of interest rate hikes to fight rising inflation. “Howbeit, this inflation targeting model adopted has yielded little or no impact as the rate of headline inflation rises to new highs every month.
“The latest report from the National Bureau of Statistics on Nigeria’s consumer price inflation shows another rise, albeit at a slower pace, with the headline index reaching 34.19 per cent year- on- year in June 2024.
“This marks the 18th consecutive month of acceleration and the first time since March 1996 that the inflation rate has crossed 34 per cent, falling slightly below. The June inflation was primarily due to the impact of the depreciation of the naira, increased food demand associated with the Eid- alKabir festivities and depletion of the off- season harvest,” the analysts said.
The report said: “Looking ahead, we believe that inflationary pressures may have peaked in June and should begin to moderate in July, mainly due to a high statistical base from the prior year and a slower increase in energy prices.
"All told, we forecast the headline inflation to settle at 2.16 per cent MOM in July, translating to a YOY print of 33.24 per cent."
Also, Cowry Asset Management Limited predicted a moderation in inflation in the second half of the year largely due to the high base effects of the hike in interest rates.
According to the analysts, the slow acceleration in headline inflation over the last four months is an indication that the impact of the CBN'S tightening measures is permeating the economy. However, they noted that some downside risks to this expectation exist, as consumer prices may face further pressure on the minimum wage, significant depreciation of the naira and high PMS prices due to ongoing fuel scarcity, which could negatively affect transportation costs.