Nigeria’s Inflation to Drop to 16.95% in February—FSDH

By Modupe Gbadeyanka

A new report released on Thursday, March 2, 2017, by FSDH Research has revealed that the February 2017 inflation rate (year-on-year) is expected to drop to 16.95 percent from 18.72 percent recorded in the month of January 2017.

According to FSDH Research, the drop in inflation rate is expected after 15 months of consecutive increase and to “come mainly as a result of base effect.”

On March 15, 2017, the National Bureau of Statistics (NBS) is expected to release the inflation rate for the month of February 2017.

It was disclosed that the monthly Food Price Index (FPI) that the Food and Agriculture Organization (FAO) released yesterday shows that the Index averaged 175.5 points, 0.52 percent higher than the slightly revised value for January 2017, and 17.24 percent higher than the February 2016 figure.

With the exception of vegetable oil, the increase in the FPI represented increases in all categories of commodities used in the calculation of the FFPI.

The FAO Cereal Price Index increased by 2.52 percent from the previous month and represents an eight-month high.

The sustained increase recorded in the cereal price Index is as a result of the rise in the prices of wheat, maize and rice.

The FAO Meat Price Index was up by 1.06 percent as prices of bovine and ovine meat increased sharply while those of poultry and pig meat changed marginally.

The FAO Dairy Index appreciated marginally by 0.64 percent from January 2017, and recorded the highest level since August 2014. Butter and whole milk powder were the major drivers of the Index.

Also, the FAO Sugar Price Index was up by 0.61 percent in February on the heels of reports of low production conditions in the main sugar producing regions of Brazil, India and Thailand.

On the flip side, the FAO Vegetable Oil Price Index was down by 4.09 percent.

The Index is however, still 19 percent up from last year.

Easing global import demand put downward pressure on the prices of palm oil and soy.

The prices of food items that FSDH Research monitored in February 2016 moved in varying directions.

The prices of tomatoes, sweet potatoes, meat and garri were up by 16.23 percent, 11.11 percent, 5.13 percent and 4.17 percent respectively; meanwhile, the prices of palm oil, Irish potatoes, rice, onions, beans and fish were down by 8.33 percent, 7.41 percent, 5.33 percent, 3.33 percent, 3.33 percent and 0.72 percent respectively.

The prices of vegetable oil and yam remained unchanged.

The movement in the prices of food items during the month resulted in 0.85 percent increase in our Food and Non-Alcoholic Index to 222.31 points.

“We also noticed increases in the prices of Housing, Water, Electricity, Gas & Other Fuels divisions between January 2017 and February 2017.

“Our model indicates that the price movements in the consumer goods and services in February 2017 would increase the Composite Consumer Price Index (CCPI) to 217.41 points, representing a month-on-month increase of 0.78 percent.

“We estimate that the increase in the CCPI in February will produce an inflation rate of 16.95 percent lower than the 18.72 percent because of the sharp increase in the CCPI in February 2016,” the report said.