Consultants have combined expectations concerning February’s inflation price, with some predicting a slight moderation or stability, whereas others foresee a marginal enhance.
Nevertheless, no sharp decline is predicted.
Whereas some consultants anticipate a decline within the month-on-month (m/m) inflation price, there’s, nonetheless, no clear consensus on the year-on-year (y/y) outlook.
The year-on-year inflation price stays unsure on account of elements reminiscent of gas value reductions, overseas trade stability, and the affect of meals provide shortages in the course of the fasting interval.
Though analysts level to the just lately rebased Shopper Worth Index (CPI) as a supply of uncertainty in inflation projections, considerations have been raised concerning the methodology utilized by the Nigeria Bureau of Statistics (NBS) to find out the rebased CPI, additional complicating exact estimates.
Professional opinions on inflation tendencies
The Managing Director of Arthur Steven Asset Administration Asset, Mr Olarunde Amolegbe, famous that, “My expectation is that Inflation might be going to return in flat or present a slight enhance. Although we noticed a discount in gas costs final month, this doesn’t seem to have an effect on the shelf value of different gadgets. There was additionally an enchancment in FX stability and costs, all it did was sluggish the speed of inflation somewhat than trigger it to drop.”
- The Head of Analysis at Afrinvest West Africa, Damilare Asimiyu, estimated that the m/m headline, meals, and core inflation charges would hedge decrease to about 3.6%, 3.9%, and 2.8% respectively from 10.7%, 10.3%, and 10.9% in January because the sharp rebasing impact begins to decrease on the m/m studying.
“Though 70% of our modelled situations means that y/y studying too ought to decline beneath 24.7% recorded in January in a base case, lack of readability on how NBS arrived on the rebased CPIs for January 2024 (88.9, 87.5, and 90.4 for all gadgets, meals, and core inflation index sequentially) with none indication of what the rebased indices for the remainder of the months are (February to November), clouds exact estimation of the bottom interval. Therefore, precision on the y/y studying is difficult.
“As per our expectation for the m/m, the studying is anchored on combined value actions within the month – PMS value fell however restricted provides of some meals gadgets forward of fasting (particularly grains like beans) – pressured costs larger.”
- As for Norrenberger Head of Analysis, Samuel Oyekanmi, he acknowledged, “I count on it to average barely from the January determine. Elements like: Steady FX, Decline in petrol costs (a minimum of from the Dangote entrepreneurs), improved meals provide for a number of the consumables.”
Elements that might contribute to inflation end result for the month
- Decline in petrol costs: Dangote Petroleum Refinery lowered its ex-depot PMS value twice in February, dropping from N950 to N890 and later to N825 per liter. Following swimsuit, the Nigerian Nationwide Petroleum Firm Restricted (NNPCL) additionally lowered its pump costs, doubtlessly easing inflationary strain.
- Meals costs: Some important meals gadgets noticed value reductions, with improved provide in sure consumables. Nairametrics performed a bodily market survey in February and the info supported this. Nevertheless, meals provide shortages as a result of fasting interval may push costs larger.
The federal government has dedicated to growing meals manufacturing and provide. In the course of the month, the Minister of Data and Nationwide Orientation, Mohammed Idris, acknowledged that the Federal Authorities is commited to decreasing the price of meals commodities by way of large investments in agricultural manufacturing somewhat than taking management measures.
- Overseas Change Stability: The naira remained comparatively steady in February, fluctuating between N1,500/$ and N1,540/$ in each the parallel and official markets.
By the month’s finish, the naira appreciated in opposition to main currencies as reported by Nairametrics, strengthening to N1,540/$ from N1,620/$ (7.41% appreciation), N1,910/£ from N2,000/£ (4.50% acquire), and N1,550/€ from N1,660/€ (6.34% acquire).
What to anticipate in March
Costs of important meals gadgets are lowering out there, additionally costs of imported meals gadgets are dropping on account of naira stability.
- Nairametrics performed a market survey this week, which revealed that there’s a discount in costs of beans, rice, potatoes, onions, aside from pepper.
Nevertheless, scarcity in meals provide might drive costs up once more.
- Dangote Refinery’s value reductions might stabilize gas prices at N860 to N900. However, an finish to the continued value competitors between Dangote Refinery and NNPCL may push gas costs above N1,000. This was the comment by the Chief Economist on the SBM Professionals, Dr. Paul Alaje in a dialog with Nairametrics.
- As noticed by Nairametrics from its information development, the current stability of the naira could also be short-lived, as early March tendencies point out a weakening forex, which may result in larger import prices and elevated inflation.
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