Recession bites harder as Analysts predict 18.14% Inflation in September

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BY Nse Anthony-Uko,

ABUJA, (Sundiata Post) – Despite reassurances from both monetary and fiscal authorities that the end of the recession is in sight, analyst forecast indicate a higher rate of inflation in September as higher costs of goods and services continues to put a strain on the masses.

Analysts at FSDH Research say they expect the September 2016 inflation rate (year-on-year) to increase further to 18.14 per cent from 17.61 per cent recorded in the month of August 2016 as most of the divisions which contribute to the headline inflation rose during the period as a result of the continued on the value of the Naira.

The National Bureau of Statistics (NBS) is expected to release the inflation rate for the month of September 2016 on October 15, 2016 based on the data calendar on its website.

According to the Food Price Index (FPI) released by the Food and Agriculture Organization (FAO) on Thursday, the FPI increased in September the highest figure since March 2015. The Index was up by 2.9 per cent compared with August, mainly due to the increase in dairy prices with moderate price increases in sugar, meats and oils.

The FAO Dairy Price Index appreciated by 13.8 per cent from August as butter stocks ran low and lower milk production in the European Union (EU) loomed. There are also concerns that milk exports going forward are expected to be muted. The FAO Sugar Price Index was up by 6.7 per cent in September for the fifth consecutive month.

The FSDH Research said the prices of most of the that it monitored in September 2016 increased. The prices of onions, tomatoes, beans, sweet potatoes, fish, vegetable oil, garri, palm oil, Irish potatoes, rice and yam were up by 51.67 per cent, 28.62 per cent, 26.19 per cent, 20.47 per cent, 13.49 per cent, 13.02 per cent, 11.43 per cent, 12.79 per cent, 10 per cent, 5.56 per cent and 4.76 per cent. The price of meat however, remained unchanged. The movement in the prices of food items during the month resulted in a 1.25% increase in our Food and Non-Alcoholic Index to 212.06 points. We also noticed increases in Clothing and Footwear; Housing, Water, Electricity, Gas & Other Fuels divisions between August and September 2016.

“Our model indicates that the price movements in the consumer goods and services in September 2016 would increase the Composite Consumer Price Index (CCPI) to 208.46 points, representing a month-on-month increase of 1.05 per cent. We estimate that the increase in the CCPI in September will produce an inflation rate of 18.14 per cent.

“Our analysis indicates that the value of the Naira appreciated at the inter-bank market by 1.48 per cent while it depreciated at the parallel market by 12.32 per cent in September 2016. The Naira gained N4.62 to close at US$/N311.62 at the inter-bank market while it lost N59 to close at US$479 at the parallel market. The depreciation recorded in the exchange rate in the parallel market between the two months and higher prices in the international market would continue to put further on domestic prices, they said.