ABUJA: Following the decline in the consumer price index in Nigeria for two consecutive months, analysts are predicting further downward movement in the coming months. But they are cautious in their optimism about the CPI trajectory. The National Bureau of Statistics released the data for the CPI, which measures inflation, last Thursday. According to NBS, the CPI increased by 17.26% (year-on-year) in March but at a slower pace as it represented a decline by 0.52% points from the 17.78% recorded in February, Thisdaylive reported. The March headline inflation, which declined for the second consecutive month on a year-on-year basis, according to NBS, represented the effects of stabilizing prices in already high food and non-food prices as well as favorable base effects over 2016 prices. “It is also indicative of early effects of a strengthened naira in the foreign exchange rate market. Price increases were recorded in all Classification of Individual Consumption According to Purpose, or COICOP, divisions that yield the headline index,” the agency added.
NBS, however, explained, “The major divisions responsible for accelerating the pace of the increase in the headline index were housing, water, electricity, gas and other fuel, education, food and beverages, clothing and footwear and transportation services.” On a month-on-month basis, the headline index increased by 1.72% in March 2017, 0.23% points higher from the rate recorded in February, the agency stated. “The food index increased by 18.44% (year-on-year) in March, slightly down 0.09% points from rate recorded in February (18.53%) driven by increases in the prices of bread, cereals, meat, fish, potatoes, yams and others, while the slowest increase in food prices year on year were recorded by soft drinks, fruits, coffee, tea and cocoa,” it pointed out.
The headline index is made up of the core index and farm produce items. Processed foods are included in both the core and food sub-indices, implying that these sub-indices are not mutually exclusive. The pace of increase in the headline index, however, ran contrary to the projections of analysts. For instance, analysts at Financial Derivatives Company Ltd had forecast that headline inflation would in March decline for the second month to 16.4% (representing some 1.38 percentage points decrease), as a result of further waning of the 2016 base year effects. Meanwhile, analysts at FSDH Merchant Bank estimated that the March 2017 inflation rate (year-on-year) would drop to 16.52% (1.26 percentage points decrease) from 17.78% recorded in the month of February 2017.But analysts at the Economic Intelligence Group of Access Bank Plc came close with a projection that the inflation rate (year-on-year) would moderate downwards to 17.1% in March 2017 from 17.8% in February 2017, showing a decline of 0.70 percentage points.
