Inflation may drop to 11.03% – Report
Ahead the release of September inflation figures, analysts have predicted a further decline in inflation rate to 11.03 per cent from 11.70 per cent and 12.8 per cent in August and July respectively.
According to FSDH Securities Limited, it arrived at the forecast based on the report that the Food and Agriculture Organization (FAO) Food Price Index (FFPI) for September 2012 which was released on October 04, showed that the Index averaged 216 points in September, up by 1.4 per cent from August figure on account of a spike in the global prices of dairy products, meat and cereals products, but drop in the international prices of sugar and oils tempered the level of the rise in the Index for the month of September.
The firm explained the value of the Naira appreciated marginally against the US Dollar in August by 0.01 per cent, in addition to the appreciation of 0.03 per cent in July. “Consequently, the appreciation in the value of the Naira in September lowered the pass-through effects of the prices of imported consumer goods in Nigeria between the two months under review,” it added.
However, analysis of the consumer prices it monitored across the country in September showed the prices of beans soared by about 100 percent while prices of rice increased marginally by about 0.25 per cent. “The drastic rise in the prices of beans was due to the security challenges in Maiduguri, Borno state, where beans is majorly grown in the country.
Prices of tubers declined marginally while the prices of vegetables remained fairly stable. Also, prices of educational materials increased on account of the beginning of the new academic session. Moving forward, the recent flood disaster in Kogi, Benue, Anambra, Edo, Delta, Ebonyi, Bayelsa, Edo and Imo states which destroyed a lot of farmlands may lead to food shortage and cause prices of food to increase drastically to end the year, except the Federal Government releases food from its strategic reserves.
The affected items are: rice, maize, yam, cassava, fish, cattle and vegetables.” “FSDH Research is of the opinion that inflation rate (year-on-year) in the month of September 2012 should moderate downward due to the effect of positive factors mentioned above.
“Our estimate points to an increase of 80 basis points in CCPI to 137.7points in September, which will produce an inflation rate of, 11.03 per cent, 67 basis points lower than 11.70 per cent recorded in the month of August. The Composite Consumer Price Index (CCPI) would have to increase by 1.42 per cent between August and September to produce an inflation rate higher than 11.70 per cent.”
“Meanwhile, it is unlikely that CCPI would increase by 1.42 per cent between the two months. We note that the weight of beans in the food basket is not substantial because consumers spend more money on rice than beans. In addition, the weight of Education in the CCPI is only 3.94 per cent.
Therefore, increase in the prices of these two items will not significantly impact the CCPI.” The monthly CCPI for All Items for the month of August stood at 136.6 points, a marginal increase of 0.67 per cent between July 2012 and August 2012. The CCPI 12-month average increased to 11.8 per cent in August from 11.6 per cent in July 2012.
Source: Daily Sun