By Dipo Olowookere
There are strong indications that headline inflation will slow down by 0.03 percent year-on-year to 11.19 percent for July 2019, Meristem Research has said.
This is because the harvests of essential agricultural commodities are expected to reduce domestic inflationary pressures from crops; owing to increased volume.
Same as June 2019, data from countrywide agro-commodity surveys reflect a decline in food prices just as energy prices stayed flat in July as supplies continue to remain stable, dispelling any form of price increases due to scarcity.
In addition, data from the Central Bank of Nigeria’s PMI survey also reflected moderation in prices as survey respondents reported slower expansion of 59.50 and 52.20 points (vs. 62.50 points and 52.40 points) in the input and output prices respectively during July.
According to Meristem Research, overall, inflationary pressures across board remain tempered, building a substantial case for a further slowdown in growth
On the global scene, economic metrics across developed and emerging markets continue to signal a slowdown in economic activities.
It said the lingering trade war between the United States and China, geopolitical challenges in the Middle East and structural deficiencies in the Eurozone remain primary headwinds facing the world economy.
In response, the monetary authorities have taken an accommodative stance in support of economic growth, like the US, South Korea, Australia and South Africa cutting rates in July while China and the EU continued to maintain the stimulus environment to drive growth and induce inflation.
In comparison with prices in June, oil prices inched up by 1.89 percent while International food prices as measured by the FAO Food Price Index (FFPI) declined by 1.1 percent, keeping the import price paid by the country in check.
Consequently, the effect of inflationary pressures from the external environment remains tempered, increasing the probabilities of continued moderation in core inflation.
Adedapo Adesanya