Nigeria’s Inflation to Close 2018 in Double Digits at 10.4%—Analysts

August 7, 2018
inflation rate Nigeria

By Dipo Olowookere

If the forecast of analysts at FSDH Research is anything to go by, Nigeria will likely not meet the target of a single digit inflation rate set for 2018 at the beginning of this year.

This is because those at the investment research firm said with the present situation, that target will likely not be met.

In its weekly insight released on Monday, August 6, 2018, FSDH Research is predicting that the inflation rate will likely end the year at 10.40 percent.

Business Post reports that in June 2018, the National Bureau of Statistics (NBS) disclosed that the year-on-year inflation dropped to 11.23 percent.

Analysts at FSDH Research are forecasting that inflation will likely moderate to 11.01 percent.

The stats office is expected to release the inflation figures on Wednesday, August 15, 2018, with the GDP for Q2 2018 due for release on August 20, 2018.

“FSDH Research notes that the June inflation figure recorded the highest month-on-month increase since June 2017.

“Although the inflation rate may continue to drop, it may remain in double digits in 2018. Under the current situation, FSDH Research expects the inflation rate to end the year in the region of 10.4 percent.

“The expected drop in the inflation rate may lead to a further drop in the yields on Nigerian Treasury Bills (NTBs),” the report said.

Also in the report, FSDH Research said the drop in the inflation rate for July would be largely due to the base effect of the previous year.

“In addition, we observe a slowdown in the price movement of some food items. The prevailing crisis in the food producing states in Nigeria is putting an upward pressure on food prices. This is a major risk to the achievement of a single digit inflation rate in 2018.

“The prices of most of the food items we monitored in July 2018 showed a slower increase compared with June 2018.

“The movement in the prices of food items increased our Food and Non-Alcoholic Index by 1.18 percent in July compared with an increase of 1.56 percent recorded in June. This Index increased year-on-year by 12.57 percent, up from 248.82 points recorded in July 2017.

“We also observed increases in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between June and July 2018,” it added.

The investment company also stated that it observed an expansion in the Purchasing Managers’ Index (PMI) published by the Central Bank of Nigeria (CBN) for the month of July 2018.

The Manufacturing PMI at 56.8 points in July grew at a slower rate than the 57.0 points recorded for June.

“Meanwhile, the Non-Manufacturing PMI increased to 57.7 points in July 2018 from 57.5 points in June 2018. We note that both PMI figures are above the baseline of 50 points.

“Additional fiscal measures to improve the ease of doing business in Nigeria would lead to a further expansion in the PMI,” it said.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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