MARKET DEVELOPMENT
Nigeria: Inflation Predicted to Rise On Higher Food Prices
Nigeria: Inflation Predicted to Rise On Higher Food Prices
11/01/2016 (AllAfrica.com) - The FSDH Merchant Bank Limited has predicted that the December 2015 inflation rate (year-on-year) will inch up to 9.42 per cent from the 9.37 per cent recorded in November 2015.
The increase, according to the firm would be driven by higher food and non-alcoholic Beverages division, and transportation division due to the fuel shortage.
Food prices at the international market in 2015 dropped because of abundant supply, weak global demand and an appreciating US Dollar.
The Food and Agriculture Organisation (FAO) Food Price Index (FFPI) for the month of December 2015 released last week showed that the Index averaged 154.1 points. This was 0.98 per cent lower than the revised value in November 2015.
According to the FAO, all the commodities included in the FFPI dropped except for sugar and oil prices. The FAO Meat Price Index was down 1.6 per cent on the heels of reduced import demand from the US and a surge in output stemming from the European Union.
Also, the FAO Cereal Price Index was down by 1.28 per cent from the previous month, due to the expectation of additional supply from the wheat and maize categories. The price of rice on the other hand was stable.
Meanwhile, an analysis by FSDH Merchant Bank indicated that at the interbank market, the value of the naira was unchanged at $/N199.08 same as in November.
However, the value of the naira lost 9.63 per cent in the parallel segment from $/N244.00 in November to $/N270.00 in December. It noted that the higher depreciation in the value of naira at the parallel market than the drop in food prices at the international market had a negative impact on local prices.
The prices of food items that FSDH Research monitored in December 2015 moved in different directions. The prices of food items such as sweet potatoes, yam, palm oil, fish, meat and rice increased by 20 per cent, 18.33 per cent, 8.17 per cent, 6.92 per cent, 4.55 per cent and 2.27 per cent respectively. But the prices of garri and beans remained unchanged.
"The movement in the prices of food items during the month resulted in 0.95 per cent increase in our Food and Non-Alcoholic Index to 185.25 points. We also noticed an increase in the prices of transportation, housing, water, electricity gas and other fuel between November and December 2015.
"Our model indicates that the price movements in consumer goods and services in December 2015 would increase the CCPI to 179.92 points, representing a month-on-month increase of 0.87 per cent. We estimate that the increase in the CCPI in December will produce an inflation rate of 9.42 per cent," the report added.
The increase, according to the firm would be driven by higher food and non-alcoholic Beverages division, and transportation division due to the fuel shortage.
Food prices at the international market in 2015 dropped because of abundant supply, weak global demand and an appreciating US Dollar.
The Food and Agriculture Organisation (FAO) Food Price Index (FFPI) for the month of December 2015 released last week showed that the Index averaged 154.1 points. This was 0.98 per cent lower than the revised value in November 2015.
According to the FAO, all the commodities included in the FFPI dropped except for sugar and oil prices. The FAO Meat Price Index was down 1.6 per cent on the heels of reduced import demand from the US and a surge in output stemming from the European Union.
Also, the FAO Cereal Price Index was down by 1.28 per cent from the previous month, due to the expectation of additional supply from the wheat and maize categories. The price of rice on the other hand was stable.
Meanwhile, an analysis by FSDH Merchant Bank indicated that at the interbank market, the value of the naira was unchanged at $/N199.08 same as in November.
However, the value of the naira lost 9.63 per cent in the parallel segment from $/N244.00 in November to $/N270.00 in December. It noted that the higher depreciation in the value of naira at the parallel market than the drop in food prices at the international market had a negative impact on local prices.
The prices of food items that FSDH Research monitored in December 2015 moved in different directions. The prices of food items such as sweet potatoes, yam, palm oil, fish, meat and rice increased by 20 per cent, 18.33 per cent, 8.17 per cent, 6.92 per cent, 4.55 per cent and 2.27 per cent respectively. But the prices of garri and beans remained unchanged.
"The movement in the prices of food items during the month resulted in 0.95 per cent increase in our Food and Non-Alcoholic Index to 185.25 points. We also noticed an increase in the prices of transportation, housing, water, electricity gas and other fuel between November and December 2015.
"Our model indicates that the price movements in consumer goods and services in December 2015 would increase the CCPI to 179.92 points, representing a month-on-month increase of 0.87 per cent. We estimate that the increase in the CCPI in December will produce an inflation rate of 9.42 per cent," the report added.