By Modupe Gbadeyanka
Analysts at FSDH Research say they expect the inflation rate (year-on-year) to increase further to 11.37 percent in September 2018 from 11.23 percent recorded in August 2018.
The firm based its projection on the increase in the prices of some food items as the major driver of the expected increase in the inflation rate.
On Tuesday, October 16, 2018, the National Bureau of Statistics (NBS) is due to release the inflation rate for the month of September.
In its last release, the inflation rate halted the 18th consecutive drop in August 2018, raising fears in some quarters, especially with a contraction in the nation’s Gross Domestic Product (GDP) in the second quarter of this year.
According to FSDH Research, the Food Price Index (FPI) report the Food and Agriculture Organization (FAO) published for the month of September 2018 notes that food prices in the international market decreased from the August levels.
All the categories of commodities used in the calculation of the FAO Food Index dropped in value, except sugar. Drought conditions in Brazil, the world’s largest sugar producer and exporter, impacted negatively on sugarcane yields thereby forcing prices of sugar up.
However, large supply global prospect and weak global import demand in cereal, oil and dairy products exerted downward pressure on these prices.
FSDH Research’s analysis indicates that the value of the Naira depreciated at both the Nigerian Autonomous Foreign Exchange (NAFEX), and the parallel market in September 2018. At the NAFEX and parallel markets, the value of the Naira depreciated by 0.29 percent and 0.07 percent to close at
$/N363.72 and $/N306.35 respectively.
The depreciation recorded in the value of the Naira in the foreign exchange market reduced the positive impact of the decrease in the international prices on imported consumer goods in Nigeria.
The prices of food items that FSDH Research monitored in September 2018 moved in varying directions, and led to an overall 1.10% increase in our Food and Non-Alcoholic Index. This Index increased year-on-year by 13.37 percent, up from 253.84 points recorded in September 2017.
“We also observed an increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between August and September 2018. We estimate that the increase in the Composite Consumer Price Index (CCPI) in September would produce an inflation rate of 11.37 percent,” the firm said.
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