Aduragbemi Omiyale
By Aduragbemi Omiyale
Analysts at Meristem Research are projecting that inflation in May 2023 will rise to 22.42 per cent from the 22.22 per cent recorded in April 2023.
The National Bureau of Statistics (NBS) is expected to release the inflation numbers today, June 15.
In a note obtained by Business Post, Meristem said the rise in the average cost of goods and services in the period under review would be caused by an “increase in food prices,” especially in vegetables, oils, bread, and tubers.
“We expect the headline inflation to increase by 20 basis points to 22.42 per cent from 22.22 per cent YoY in April 2023,” Meristem said.
“Contrary to the decline in global food prices, key food prices in the domestic economy are expected to remain elevated based on our perception of market prices.
“Also, gleaning insights from the NBS’ selected food price watch for April 2023, the increase in food prices for May is likely to result from the higher cost of vegetables, oils, bread, and tubers.
“In addition, the supply shortage of tomatoes due to the outbreak of the tomato disease, as noted in April’s report, persists and resulted in a 3.97% MoM increase in tomato prices, according to the NBS.
“The core index is also expected to increase on the back of higher gas prices, Premium Motor Spirit (PMS), and National Household Kerosene (NHK). Reported cases of fuel scarcity are likely to be catalysts underlining higher PMS prices in May.
“Lingering challenges with sourcing FX and the 10.56% YoY depreciation of the domestic currency against the greenback on the I&E window are also factors expected to increase the prices of import-dependent items,” it stated.
Meristem noted that, “The deregulation of PMS and the intention to unify the exchange rate windows pose a significant upside risk to inflation.
“Fuel subsidy removal, which has led to a repricing of the commodity, is expected to significantly impact the core index.
“Also, we expect the impact of higher PMS prices to trickle to the food index due to its expected impact on transportation costs.
“Furthermore, we expect the proposed unification of the exchange rate to result in the devaluation of the naira on the official window. Thus, domestic prices are projected to remain high in the near to medium term,” the report stated.
