By Dipo Olowookere
Analysts at FSDH Research have predicted that inflation rate in Nigeria for the month of May 2018 would moderate to 11.50 percent from 12.48 percent recorded in April 2018.
In its Inflation Watch report, the firm explained that this drop would be influenced by base effect in the Composite Consumer Price Index (CCPI) from the previous year.
The National Bureau of Statistics (NBS), according to its calendar, is expected to release the inflation figures on Wednesday, June 13, 2018.
The headline inflation has been on downward trend since last year and the Nigerian government is targeting a single digit inflation rate before the end of this year.
In its report released yesterday, FSDH said in the month of May, most consumer prices recorded elevated prices.
For example, the Food Price Index (FPI) from the Food and Agriculture Organization (FAO) for the month of May 2018 showed that the Index averaged 176.2 points, 1.24 percent higher than the revised value for April 2018, and 1.90 percent higher than the May 2017 figure.
According to the FAO, prices of dairy products and cereals rose during the month while vegetable oils and sugar prices remained under downward pressure.
The FAO Dairy Price Index was up for the fourth consecutive month, recording an increase of 5.45 percent between April and May.
Increased demand for products such as cheese, skimmed milk powder and butter contributed to the rise in the value of the Index. The FAO Cereal Price Index was up by 2.44 percent, largely due to the increase in the prices of wheat, coarse grains and rice.
However, the FAO Vegetable Oil Price Index was down by 2.58 percent, primarily driven by a decline in the prices of palm, soy and sunflower oils occasioned by slow global imports demand and large inventories.
The FAO Sugar Index fell for the sixth consecutive month as a result of increased supply conditions in the main sugar producing region of Brazil. The FAO Meat Index was marginally down by 0.48 percent driven by the decrease in the prices for ovine and pig meat.
FSDH’s analysis indicated that the value of the Naira depreciated at both the Nigerian Autonomous Foreign Exchange (NAFEX) and parallel markets in May 2018.
The value of the Naira lost by 0.40 percent and 0.14 percent to close at $/N361.62 and $/N363.50 respectively at the NAFEX and parallel markets at the end of May.
The rise in the international prices of food coupled with the depreciation in the value of the Naira led to an increase in the prices of imported consumer goods in Nigeria between the two months under review.
In the report, FSDH Research noted that there is a potential increase in the local prices of imported food items because of the faster than expected increase in the international food prices.
The prices of most of the food items that FSDH Research monitored in May 2018 increased substantially, leading to a 1.20 percent increase in its Food and Non-Alcoholic Index.
This Index increased year-on-year by 13.29 percent, up from 240.30 points recorded in May 2017. The firm also observed an increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between April and May 2018.
Modupe Gbadeyanka