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The Economic Intelligence Group, a research arm of Access Bank, forecasts inflation rate (year-on-year) in April to sustain the downward trend started last year, easing to 12.56 percent compared to 13.34 percent in March.
The National Bureau of Statistics (NBS) is scheduled to release the inflation figure for April 2018 on May 13, 2018, based on the Data Release Calendar available on the Bureau’s website.
The EIU analysis indicates that the slower inflation rate in April reflects a moderation in food prices and continued stability in the currency.
According to the report food inflation, which makes up 51.8 percent of the CPI basket continued its descent in April.
This mainly reflected declines in prices for staples such as yam and Irish potato which continue to benefit from robust supplies to the market from barns across the country as well relatively stable transport costs in the month. Processed foods such as pasta and milk also nudged slightly lower, enjoying support from stable transport prices.
April’s easing of price pressures also reflect stability in the core index which excludes farm products and energy prices, owing to improved foreign exchange liquidity and sustained interventions by the Central Bank of Nigeria (CBN). At the parallel market, the Naira closed at N362/$ on April 30th same as a month earlier.
Treasury bill yields are likely to contract further, as market players react to declining inflation. The yields on the 3- and 6-month treasury bills settled at 10.72 percent and 11.02 percent respectively on April 30th, compared with 14.43 percent and 14.97 percent in that order on March 29th.
“While continued slowdown in the price pressures supports the case for less restrictive monetary policy, we believe the monetary regulator may likely wait to see inflation trend below 12 percent before commencing easing”.
With no change in the benchmark rate anticipated, we expect the CBN to continue issuance of OMO and Stabilisation Securities with focus on curbing naira liquidity to manage USD demand”, the analysts said.
