Analysts predict inflation to dip to 11.35% in January

0
142

Financial Derivate Company (FDC) has predicted that the nation’s inflation rate is expected to slide to 11.35per cent in January from 11.44per cent in the preceding month.

The National Bureau of Statistics (NBS) is expected to release Consumer Price Index and inflation rate report for January on February 15, 2019, a day to the 2019 presidential election.

The latest report by FDC analysts stated that, “This is likely to be a reflection of a fall in disposable income in January, leading to a decline in aggregate demand for consumer goods. The pattern of slow demand early in the year is seasonal and is empirically validated.

“In recent times, January inflation numbers have declined. This validates that the assertion in personal income compression in January is partly because of the payment of school bills and the post Christmas expenditure effect.”

“The moderation in the headline inflation would come as a relief to policymakers who are concerned that inflation will continue its upward movement which started in November. Not-withstanding, the inflation number is still a mile away from the CBN’s comfort zone of six-nine per cent.”

The report noted that the month-on-month inflation (which is more reflective of current prices) is projected to decline to 0.72per cent (8.96 per cent annualized) from 0.74per cent (9.31per cent annualized) in December 2018.

“This we believe will be driven by the fall in the prices of the food basket. The most significant is the sharp drop in the price of onions which declined to N18,000 per sack after staying stubbornly high at above N30,000 per sack for five months,” the report by FDC explained.

According to the report on inflation outlook, “The moderation in the headline inflation is expected to be short-lived as the boost in liquidity stemming from the minimum wage implementation and election-related spending would increase aggregate spending and push up prices.

“In addition, the mobile payment launch by the mobile network operators would enhance efficiency in the payment system and increase the velocity of money in circulation. However, this could increase money supply and weigh on the general price level.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here