The latest inflation rate, for August, is at a five-year low of 8.2 percent
Financial Derivatives Company, FDC, a diversified financial institution, has predicted that Nigeria’s consumer price index, CPI, which measures changes in the price level of a market basket of consumer goods and services purchased by households, would drop to about 7.83 percent for the month of September.
Nigeria’s composite headline inflation rate, calculated by taking price changes of varying periods for each item in the national basket of goods and services, has maintained a downward trend in the past nine months, according to the National Bureau of Statistics, NBS, data.
The nation’s inflation is currently at a five-year low of 8.2 per cent as at last August, a that trend has prompted calls, especially from manufacturers, for the Central Bank of Nigeria (CBN) to adjust its monetary policy stance and cut its Monetary Policy Rate (MPR) from the current 12 per annum to a more accommodating level.
“In the month of September, we are forecasting that the national headline inflation will be 7.83 per cent, the lowest point since March 2008,” FDC said in the report in its latest economic bulletin.
Official monthly inflation are usually released by the National bureau of Statistics weeks into the new months. The bureau has yet to release September’s index.
However, independent finance houses usually do predict inflation rates before official rates are released.
The report by Financial Derivatives Company, attributed the moderation in the rate of inflation to seasonality associated with the harvest of farm products and price stability of the core index in the third quarter of the year, adding that the tight monetary policy stance by the CBN has also helped in containing inflationary pressures in 2013.
Contrasting the headline inflation forecast in September, the firm said the Lagos urban inflation edged up to 11.69 per cent from 11.57 per cent in August, which indicates that the rate of price increase in Lagos was more than that of last month (11.91 per cent), attributable mainly to a 0.53 per cent increase in prices of food, beverages, diesel and their distribution costs.
The index of the non-food basket, the report noted, declined by 0.13 per cent in September to 8.67per cent as a result of lower prices of kerosene, shoes and stability in prices of other items in the basket, also supported by Naira stability in the foreign exchange market.
The report also reviewed the Nigerian macroeconomic environment in the past two months, noting a mixed scenario, with higher interest rates and speculative pressure on the Naira expected to heighten investors’ anxiety.
Anticipating the impact of the US tapering off its assets purchase programme, coupled with the stalemate in the sharing of the monthly statutory revenue allocation in the Federation Account to the three tiers of government, which continued to fuel the uncertainties that have enveloped the markets over the last four weeks.
While most businesses, manufacturers and the government would like a rate cut to help revive the dwindling economic growth, the report said this would risk pushing inflation higher and further weakening the Naira, which recorded a year low of N163.97 to the dollar (interbank) in the first week of September.
“In our view, despite the benign outlook for inflation, events such as a delay in Federation Account Allocation Committee (FAAC) payment will tighten liquidity in the system with a resulting increase in interest rates,” the firm said.
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