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Inflation: Headline index may drop to 14.31% — FSDH

By Adaeze Okechukwu

At the backdrop of the base effect of last year, the headline inflation rate for the month of February 2017 has been forecast to drop by 82 basis points (bps) to 14.31 percent from 15.13 percent recorded in January.

Analysts at FSDH Merchant Bank Limited made this projection in their monthly ‘Inflation Watch’ report stating: “We expect the inflation rate year-on-year to drop to 14.31 percent in February from 15.37 percent recorded in the month of January. The expected decrease in the inflation rate is largely attributable to the base effect of previous year. In addition, we note the decrease in some major food prices as well as the slowdown in the price movement in some categories of non-food items in the Consumer Price Index (CPI) basket.

“The prices of most of the food items we monitored in February 2018 recorded moderate increases, leading to 0.80 percent increase in our Food and Non-Alcoholic Index. The index increased by 17.50 percent from 224.77 points recorded in February 2017. We also noticed increase in the prices of transport and housing, water, electricity, gas & other fuels divisions between January and February 2018. We estimate that the increase in the Composite Consumer Price Index (CCPI) in February 2018 would produce an inflation rate of 14.31 percent lower than the 15.13 percent recorded in January.”

The merchant bank further noted that local prices of imported food items could potentially increase due to the faster than expected increase in the international food prices, adding that this may have negative impact on inflation rate going forward.


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