Nigeria may record the highest inflation rate figure since January 2019, an analyst at FSDH research have hinted. The head of research at FSDH, Ayodele Akinwunmi, who gave the hint at the monthly media press briefing at the weekend in Lagos, added that it would not be good news for the economy or the purchasing power of Nigerians.
Akinwunmi said: “Most people say they would not appreciate a situation where the prices of consumer goods increase at a rate faster than the expected increase in the approved National Minimum Wage.
“We expect the May inflation rate to further increase marginally to 11.39% from 11.37% recorded in April 2019. ADVERTISEMENT “In addition, we expect the month-on-month change in the Consumer Price Index (CPI) to increase by 1.10% in May 2019, the highest since January 2019.”
He said with the onset of the rainy season, the research arm of FSDH has observed upward pressure on the food component of the inflation basket. He said the major driver of the expected increase in the inflation rate is the increase in food prices due to the seasonality effect typically associated with the onset of the planting season.
Security challenges in some food producing regions in Nigeria have reduced the supply of food items, leading to an increase in prices. The current inflation rate is higher than the 6% – 9% target set by the Central Bank of Nigeria (CBN). Given current realities, the inflation rate will remain above the CBN’s target in the short-to-medium-term and this may reduce the real yield on fixed income securities.
The price monitor that FSDH Research conducted on certain food and non-food items in May 2019 shows that most prices increased in May compared with April. The Food Price Index that the Food and Agriculture in Organization (FAO) of the United Nations published for the month of June 2019, shows that the prices of some food items increased. The prices of milk, butter, cheese, maize and meat increased on the international market while prices of oils, wheat and sugar declined.
Most of the increases recorded on the international market were mainly as a result of limited export availabilities and improved global import demand.
Source: Daily Trust