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FSDH forecasts 7.8% inflation in April

By on May 14, 2014

The FSDH Merchant Bank Limited has predicted that the Consumer Price Index (CPI) which is used to gauge the level of inflation in the country would remain year-on-year at 7.8 per cent in April.
The CPI had closed at 7.8 per cent in March.

The National Bureau of Statistics (NBS) is expected to release its inflation figure for April 2014 this week, based on its data release calendar. According to the NBS, the monthly Composite Consumer Price Index (CCPI) for All Items for the month of March stood at 155.2 points, a marginal increase of 0.78 per cent from February 2014. The CCPI 12-month average for March stood at 8.2 per cent, down from 11.4 per cent recorded in March 2013.

But movement of food prices at the international level as measured by the Food and Agriculture Organisation (FAO) Food Price Index (FFPI) for April 2014 indicated that the Index averaged 209.3 points, 1.64 per cent lower than the estimate recorded in March, but 3.49 per cent lower than the previous year’s figure.

According to the FAO, the drop in the value of the Index in April was attributable to the fall in the prices of all categories of commodity groups apart from that of meat and cereal, which experienced a marginal increase in price.
Our analysis of the foreign exchange rate indicates that the value of the Naira appreciated marginally by 0.01% to close at N155.73 against the U.S. Dollar in the month of April 2014, same as in March 2014. The appreciation recorded in the local currency between the two months further reduced the prices of imported goods in the domestic market.

Furthermore, an analysis of the average prices of a basket of consumer goods selected from across the country monitored by the FSDH Research in April 2014 shows that there were a mix of increases and decreases in certain classes of food items, the price of rice and a few other food items remained relatively stable, the same as the previous month of March. There were increases of 10%, 13.33%, 5.56%, 5.68% and 4.09% in the prices of tomatoes, onions, sweet potato, Irish potatoes and fish respectively. The average prices of yam and beans decreased by 1.01% and 7.04% respectively, while the prices of Garri, vegetable oil, palm oil and meat prices all remained stable. The movement in the prices of food items in April 2014 resulted in a 0.70% increase in our Food and Non-Alcoholic Index to 158.70 points. We also noticed an increase in the prices of Clothing and Footwear, Recreation and Culture, Restaurants/Hotels and Others between March 2014 and April 2014 on account of the spillover of the shortage in petrol products that took place in March.

Our model indicates that the price movements in the consumer goods in April 2014 would increase the Consumer Price Index (CPI) to 156.16 points, representing a month-on-month increase of 0.61%. We estimate that the increase in the CPI in April will produce an inflation rate (year-on-year) of 7.8%, the same as the March 2014 figure. Looking ahead, the inflation rate for the month of May 2014 is expected to be marginally lower than the April figure.

The FFPI decreased by 1.64% in April 2014, compared with March 2014.
Inflation Rate: 7.8%
The value of the Naira appreciated marginally against the U.S. Dollar in the month of April 2014.
The inflation rate for the month of April is expected to remain at 7.8%.

 

 

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