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Headline inflation is anticipated to drop to 12.7 percent, the lowest level since March 2016, according to analysts at the Bismarck Rewane-led Financial Derivatives Company.
“This is mainly attributed to the waning base year effect. Whilst core inflation is projected to move in tandem with the headline inflation, we expect food inflation to move in the opposite direction driven largely by higher food prices,” the analysts at the Lagos-based financial advisory firm said in a May 4 note.
They project month-on-month (MoM) inflation to maintain its upward trend by 1.03% (13.09% annualized) due to the commencement of the planting season.
Nigerian inflation slowed for the 14th straight month in March, decelerating to 13.3 percent from a year earlier, according to data agency, the National Bureau of Statistics (NBS), the lowest rate in two years and below the benchmark rate of 14 percent.
The central bank left its main lending rate at a record high of 14 percent when policy makers met April 4 to continue fighting inflation that’s been above the target range of 6 percent to 9 percent for more than two years.
Governor Godwin Emefiele said the bank would consider cutting rates when inflation slows closer to single digits.
Inflationary pressures could come from higher spending in the second half of the year, before general elections scheduled for February, according to Nigeria’s statistician-general, Yemi Kale.
For the third straight year of expansionary fiscal policy, President Muhammadu Buhari proposed a 16 percent increase in the 2018 budget to N8.6 trillion (USD$28 billion).
The economy turned the corner in the second quarter of 2017 after five straight quarters of contraction and the government is bent on boosting spending to stimulate economic growth in Africa’s most populous nation.
The economy grew 0.8 percent in 2017, but average incomes have gone nowhere since 2015, in a country that produces people at an average of 3 percent annually.
LOLADE AKINMURELE
