By BABAJIDE KOMOLAFE

Nigeria’s inflation will rise to double digit by the end of this year, 2014 said, Razia Khan, an Economist with Standard Chartered Bank.

Photo: toonpool

She made this prediction in a commentary on inflation figures for May released on Monday by the National Bureau of Statistics. Inflation which measures rate of increase in the prices of goods and services rose to 8.0 per cent in May from 7.8 percent in April.

”We expect inflation to continue to rise in the coming months.  Given the low base Year on Year ( y/y ) Consumer Pricing Index, CPI was in single digit for all of 2013 helped by the Central Bank of Nigeria, CBN tightening and favourable food price trends domestically – the risk is that we see a breach of 10 per cent before the year-end.”, said Khan.

The Regional Head of Research, Africa, Standard Chartered Bank said, “Although both food and core inflation are exhibiting the fastest month to month increases seen since January, the impact of earlier two reign exchange weakness appears not to have been as pronounced as we expected.  All said, inflationary pressures are still relatively benign.

Nonetheless, there is evidence of upward pressure on prices.  The increase in the CPI index seen in every month since March is a touch higher than the average for those months using the index rebased to 2009.  This does not signal an alarming degree of price pressure – it merely indicates that the trend in the coming months is more likely to be higher, rather than lower inflation.

Market conditions remain liquid.  Overnight rates continue to hover near the lower end of the corridor.  The foreign exchange rate has exhibited signs of pressure despite gains in the oil price related to events in Iraq. For now, local factors appear to