Ahead of this week’s expected release of October inflation data by the National Bureau of Statistics (NBS), analysts have predicted that the figures will further rise above 18 per cent, propelled mainly by higher prices within the food and non-alcoholic beverages division, as well as increases in the energy and energy related prices. In a note obtained by New Telegraph, analysts at FSDH Research stated:
“We expect the October 2016 inflation rate (year-on-year) to increase further to 18.17per cent from 17.85per cent recorded in the month of September 2016.
The expected increase in the inflation rate will be driven by higher prices within the Food and Non-Alcoholic Beverages division, as well as increases in the energy and energy related prices.”
According to the analysts, the prices of tomatoes, vegetable oil, palm oil, rice and beans during the review period were up by 44.44per cent, 13.1per cent, 8.33per cent, 7.58per cent and 5.93per cent respectively.
They, however, stated that the prices of onions, yam, sweet potatoes, fish and garri were down by 20.58per cent, 18.06per cent, 13.89per cent, 6.58per cent and 1.6per cent respectively.
Significantly, the analysts also stated that the value of the naira appreciated at both the inter-bank and parallel market by 0.91per cent and 2.35per cent respectively in October 2016, adding that:
“The appreciation recorded in the exchange rate in both markets between the two months (September and October) under review should lower the pass through effect of imported inflation on domestic prices.”
Similarly, in their October inflation forecast released last week, analysts at Financial Derivatives Company (FDC) Limited predicted that the figures will increase marginally to 18.2 per cent, that is, a 0.3per cent increase from the previous month’s rate of 17.9per cent.
They further stated that: “We are also forecasting a month-onmonth inflation rate of 0.67per cent, which if annualized is 8.38per cent, approximately 1.92per cent lower than the September’s level. If our estimate is correct, this will be the highest YoY inflation level in 11 years.”
Interestingly, the analysts noted that: “At its September meeting, the CBN expressed concerns about rising inflation, citing this as a reason for maintaining its contractive stance.
Given that there is major clamour for lower interest rates and a stimulus package as antidotes to the recession, the reduced monthly inflation rate may sound like music to the ears of the doves in the committee.”
The NBS is expected to release the inflation rate for the month of October on November 17, based on the data calendar on its website.