Finally, Nigeria Inflation Rate Drops – – the First Time in 15 Months

Annual retail food inflation rose to 2.01 per cent last month from an upwardly revised 0.61 per cent in January, pushed by faster increases in the prices of cereals, sugar and fruits, the data showed.

The increase seen in food inflation was as a result of increases in the prices of bread, cereals, meat, fish, potatoes, yams and other tubers and wine.

For diesel, the report stated that the average price paid by consumers for the product increased by 3.68 per cent month-on-month and 68.74 per cent year-on-year to N249.38 in February from N240.52 the previous month.

Samrat Dasgupta, CEO, Esquire Capital Investment Advisors: “We feel that there’s a good chance of inflation nearing 4 percent from March because there is an increase in global metal prices, and vegetable prices may increase once the winter is over”.

WPI inflation in manufactured products rose from 3.99 per cent in January to 3.66% in February.

He said that while electricity tariff increase had posed a question of sustainability, there was also the need for more push in the foreign exchange arena to contain the pass-through effects of imported items, which continue to be out of reach of most Nigerians.

Wholesale inflation in the fuel and power segment quickened to 21% in February, from 18% in the previous month. As per market survey, CPI inflation was expected to come at 3.66%.

Excluding food and energy, prices rose 0.3% on the month following a 0.4% gain previously with the increase slightly higher than consensus forecasts of 0.2%.

It, however, stated that the increase was at a slower pace in February when compared to January consumer activities, which was 18.72 per cent. They’re also averages of all prices, weighted by the average portion of income spent upon each specific good or service.

“The likelihood of a repo rate cut in April 2017 remains subdued, given its focus on bringing inflation to 4% in a durable manner”. And the core inflation, too, looks fairly sticky.

Despite the positive signs, food inflation rose to 18.53% year on year in Feb 2017 from 17.82% in January 2017 and by 1.99% month on month in Feb 2017 from 1.29% in January.

Meanwhile, the Composite Food Index rose by 18.53 percent in February 2017.

In its sixth monetary policy, RBI said, “Q1FY18 is expected to be muted for inflation due to favorable base effects and lagged effects of demand compression”.

However, the spot rate of the naira on the interbank market depreciated to N306.25 to the dollar on Tuesday, after the central bank sold the dollar at its highest level ever on the official market.