By NKIRUKA NNOROM
Researchers at FSDH Merchant Bank have forecasted a drop in the country’s March inflation figure to 8.9 percent.
The projected figure represents 60 basis points drop from February 2013 inflation rate, which stood at 9.5 percent and 9.0 percent in January.
“FSDH Research is of the opinion that the price movements in the consumer goods in March will increase the Consumer Price Index (CPI) to 144.46 points, an increase of 1.03 percent month-on month. The March CPI will have to increase by at least 1.6 percent from February to produce an inflation rate that is higher than 9.5 percent reported in the month of February 2013. In our opinion, this is unlikely. Looking into April 2013, our estimate points to an increase in inflation rate in excess of 9.5 percent,” the report said.
To arrive at the projection, FSDH Research considered that the Food and Agriculture Organisation (FAO)’s Food Price Index (FPI) for the month of March 2013 showed that the Index averaged 212 points, up one percent from February. The FAO Food Price Index measures the monthly changes in international prices of a basket of food commodities.
According to the FAO, the rise in the Index was driven mainly by 11 percent increase in dairy, which accounts for 17 percent of the various commodity prices included in the calculation of the FPI. The rise in dairy prices is the largest recorded and was as a result of unfavourable weather conditions in Oceania which disrupted milk production and resulted in a reduction in the processing of dairy products in the region.
However, cereal prices and global rice prices remained unchanged from February, while maize prices increased on account of a fall in exportable supplies from the United States. Wheat prices fell on the prospects of good world harvest which offset the increase in maize prices. Meat prices fell by two percent, while sugar rose by one percent from February. Oils/fats increased by 2.5 percent, mostly due to a drop in soy oil prices.
“Our analysis of the foreign exchange rate shows that the value of the Naira remained stable against the US Dollar in the month of March 2013 compared with the depreciation of 0.01 percent recorded in the month of February. The stability in the value of the Naira in March 2013 reduced the impact of the rise in the prices of some imported consumer goods in Nigeria between the two months under review,” the researchers said.
“In another development, an analysis of the prices of a basket of consumer goods that FSDH Research monitored across the country in March shows that prices of some major components of the basket increased. The average prices of rice increased by about 25.98 percent on account of increase in import duties.
The price of yam increased by 26.67 percent, price of potato (Irish) increased by 24.76 percent, the prices of meat and vegetable oil increased by 3.33 percent and 0.56 percent respectively. The prices of onions and tomatoes dropped by about 12.59 percent and 3.33 percent respectively.
The price of palm oil also decreased marginally by about 3.33 per cent. However, the price of garri and that of beans remained stable during the period. The observed increases in the prices of food items in March and the increase in the demand for non-alcoholic beverages during the Easter celebration should result to about 1.30 percent increase in the Food and Non-Alcoholic Index. Other consumer items where we noticed increase in prices in March are transportation, clothing and foot wears, recreation and culture and restaurants and hotels,” they further stated.