Nigeria's inflation rate to drop below 14% in March

Nigerias inflation rate is projected to drop to 13.49% in March 2018 from 14.33% recorded in the previous months, analysts at FSDH Research have predicted.

FSDH Research stated this in a report released on Thursday, April 5, 2018. The report pointed out that the anticipated drop in the inflation rate is premised on the base effect of higher prices in the Composite Consumer Price Index (CCPI) in March 2017 than the current month.

The National Bureau of Statistics (NBS) is expected to release the inflation rate for the month of March on 16 April, based on the data release calendar on the website of the NBS.

The Statistical office in its Consumer Price Index (CPI) report for February 2018, released in March 2018, said core inflation dropped from 15.13 in January to 14.33% in February, the lowest level in almost a year.

The FSDH report is coming after Omotola Abimbola, Research Analyst at Afrinvest West Africa had told Business Insider Sub Sahara Africa that his firm estimated a further moderation in year on year inflation to 13.4% in March from 14.3% percent in February 2018.

According to the report, the increase recorded in the FPI was because of a strong recovery in dairy and cereal prices.

The FAO Dairy Price Index appreciated by 3.26% in March as prices of butter, Whole Milk Powder (WMP) and cheese were on the increase. The increase was mainly supported by strong global import demand and lower than expected milk output.

The report noted that the appreciation recorded at the interbank market between the two months under review moderated the impact of the imported consumer good prices in the domestic market.

It also stated that the prices of most of the food items monitored by the firm in March 2018 recorded moderate appreciation, leading to 1.12% increase in our Food and Non-Alcoholic Index.

“The Index increased by 16.31% from 229.71 points recorded in March 2017. We also noticed an increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between February and March."

“We estimate that the increase in the CCPI in March would produce an inflation rate of 13.49per cent lower than the 14.33% recorded in February,” it added.

Meanwhile, Nigeria's central bank policy-setting committee retained all key lending rates, at its first meeting of the year on Wednesday, April 4, 2018.

Godwin Emefiele said further tightening of the interest rate would strengthen the impact of monetary policy on inflation with complementary positive effect on capital flows and exchange rate stability.