A United Nations, agency, Food and Agricultural Organisation, FAO, and private sector institutions in the country predicted, yesterday, that inflationary pressures may still be on the nation’s economy through to the end of the year, contrary to some indicators, which pointed to a waning cost-push consumer price increases.
National Bureau of Statistics, NBS, is expected to release the inflation rate for the month of August 2016 on September 15 (tomorrow), based on the data calendar on its website.
Details of the components of July 2016 inflation reported by NBS two weeks ago, had shown that the month-on-month (MoM) increase in consumer price index (CPI) fell for a second successive month, indicating that the sustained pressure on prices experienced so far in 2016 might be dissipating.
But developments in global food baskets and economy analysts’ research point to a continued pressure on prices of goods and services. Index from the FAO showed that the Food Price Index, FPI, increased in August to a 15-month high, up by 1.95 per cent, compared with July, as most commodity prices rose in August, led by dairy, oils and sugar.
The value of the Index in August is the highest since May 2015. The FAO Dairy Index rose by 8.63 per cent from July as prices of cheese, whole milk powder and butter were on the increase.
Also, research reports by some financial institutions indicate that this development, coupled with Nigeria’s peculiar economic challenges, were still stoking up price movements. Consequently, analysts at FSDH Merchant Bank Limited foresee inflation rising further to 17.7 per cent in August, from 17.1 per cent recorded in July.
They stated: “We expect the August 2016 inflation rate (year-on-year) to increase further to 17.71% from 17.13% recorded in the month of July 2016.
“We expect the increase to come from increase in prices of food items and other non-food items as a result of continued pressure on the value of the Naira.
“Our analysis indicates that the value of Naira appreciated at the inter-bank market by 1.56 per cent, while it depreciated at the parallel market by 10.24 per cent in August 2016. “The Naira gained N4.92 to close at USD/ N316.24 at the inter-bank market, while it lost N43 to close at USD420 at the parallel market.
“The depreciation recorded in the exchange rate, particularly in the parallel market between the two months, and higher prices in the international market, would put further pressure on domestic prices.”
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