Inflation rate may rise to 17.35%

The average intrinsic value of money in Nigeria may further decline to its lowest in recent period as analysts forewarned that inflation rate may rise for the sixth consecutive time to 17.35 per cent.

In a preview, FSDH Merchant Bank stated that year-on-year inflation rate could rise to 17.35 per cent.

According to analysts, the expected increase will come from the increase in the prices of food items and other non-food items as a result of the depreciation in the value of the Naira.

The National Bureau of Statistics (NBS) is expected to speak on the new inflation rate next week, according to the schedule of the agency.

Read also: Operators lament CBN’s new money transfer directive

“Our analysis indicates that the value of the Naira depreciated at the inter-bank market and the parallel market by 11.89 per cent and 6.63 per cent respectively in July 2016. The Naira lost N38.19 and N25.00 at the inter-bank and parallel market to close at $/N321.16 and $377 respectively as at the end of July. The depreciation recorded in the exchange rate between the two months would put further pressure on domestic prices,” FSDH Merchant Bank stated in a preview obtained at the weekend.

Analysts said the prices of food items monitored in July 2016 increased compared with June 2016 with prices of yam, onions, sweet potatoes, palm oil, vegetable oil, garri, Irish potatoes, rice and fish rising by 28.7 per cent, 17.78 per cent, 10 per cent, 8.89 per cent, 7.94 per cent, 5.56 per cent, 4.55 per cent, 3.7 per cent and 1.85 per cent respectively.

The price of tomatoes however fell by 27.34 per cent while the price of beans remained unchanged.

“Our model indicates that the price movements in the consumer goods and services in July 2016 would increase the CCPI to 204.61 points, representing a month-on-month increase of 1.45 per cent. We estimate that the increase in the CCPI in July will produce an inflation rate of 17.35 per cent,” FSDH stated.

 

 

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