Inflation rate to decline marginally in October—FSDH

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By Adaeze Okechukwu

RESEARCH analysts at FSDH Merchant Bank Limited have forecasted a marginal decline in the headline inflation rate for the month of October 2017 to 15.91 percent against 15.98 percent recorded in preceding month. This is against the backdrop of slow increase in the prices of food and non-food items recorded in the month of October.

The analysts, in a recently released report ascribed the eight-month consecutive decline in the inflation rate year-on-year (YoY) from January to September 2017 to base effect in the previous year. “The expected marginal decline in the inflation rate is premised on slower increase in the food and non-food divisions, compared with the previous month,” the report stated.

The research analysts explained: “The movement in the prices of food items during the month resulted in 0.85 per cent increase in our Food and Non-Alcoholic Index to 256 points. Our Food and Non-Alcoholic Index increased by 20.24 per cent from 212.90 points in October 2016. We also noticed increase in the prices in Housing, Water, Electricity, Gas & Other Fuels divisions between September 2017 and October 2017.”

As a result, the investment bankers stated: “The general price movement in the consumer goods and services in October 2017 increased the Composite Consumer Price Index (CCPI) to 243.04 points, representing a month-on-month increase of 0.77 per cent. We estimate that the increase in the CCPI in October 2017 would produce an inflation rate of 15.91 per cent marginally lower than the 15.98% recorded in September 2017.”

Meanwhile, the monthly Food Price Index (FPI) released by Food and Agriculture Organization (FAO) of the United Nations indicated October index averaged at 176.4 points, which represents a 1.26 percent decline from the value of the preceding month.

Accordingly, FAO ascribed the decrease in the value of the Index for the month of October, to the decline in the value of all categories of commodities with the exception of cereal.  The categories of commodities that recorded decline during the month include: Dairy Index, Vegetable Oil Price Index, Meat Price Index and Sugar Price Index, while Cereal price index increased.

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