WorldStage Newsonline-- Analysts from FSDH Securities Limited has projected Nigeria’s inflation rate to increase marginally in June 2012 to 12.9 per cent, 20 basis points higher than 12.7 per cent recorded in May.
According FSDH Research the increase in the Composite Consumer Price Index (CCPI) would be influenced by the hike in import duty on rice in June, the depreciation in the value of the Naira, the increase in the prices of some food items (vegetables and tubers) and the partial impact of the new electricity tariff on consumption expenditure.
“We expect the CCPI to increase by 1.2 per cent to 135.4 points in June, which will produce a y-o-y inflation rate of 12.9 per cent,” FSDH said.
The National Bureau of Statistics (NBS) is expected to release the inflation figure for the month of June 2012 on Wednesday, July 18, 2012.
The latest inflation rate for the month of May 2012 stands at 12.7 per cent, a decrease from 12.9 per cent recorded in the month of April 2012. FSDH Research earlier released inflation rate forecast of 12.8 per cent for May in the May edition of our Inflation Watch. The monthly Composite Consumer Price Index (CCPI) for All Items for the month of May stood at 133.8 points, a marginal increase of 0.75 per cent between April 2012 and May 2012. On a month-on-month basis, prices remained fairly stable between April 2012 and May 2012.
The Food and Agriculture Organization (FAO), notes that food prices fell slightly in the month of June 2012 from a slight upward revision in May, the lowest level since September 2010.
According to FAO, the FFPI released on July 5, 2012, which measures the monthly change in the international prices of a basket of food commodities, depicted an average of 201 points in June 2012, down for the third consecutive month by 1.8 per cent from May. In addition FAO said that, continued economic uncertainties and adequate supply prospects kept international prices of most commodities under downward pressure, although growing concerns over adverse weather sustained prices of some crops toward the end of June. It is also of note that international rice prices remained largely stable, with large differences across origins. Meanwhile, the price of rice that FSDH Research monitored in different parts of Nigeria increased by about 2.04 per cent following the imposition of import duty by the Federal Government of Nigeria (FGN) in the month of June 2012. It is worthy to note that, rice accounts for about 9 per cent of total household expenditure in Nigeria.
The unresolved and worsening security challenges in the northern part of the country also puts upward pressure on basic food items such as vegetables and tubers, thus escalating the general price level. Also, the new Multi-Year Tariff Order (MYTO) for electricity consumers which commenced in June 2012 contributed to the general price increase in June. Meanwhile, the full impact of the new tariff system will reflect in the July 2012 inflation figure due to pass through effect. Furthermore, the value of the Naira depreciated against the US Dollar in the month of June by 0.12 per cent compared with the marginal depreciation of 0.03 per cent in the month of May, leading to increase in the prices of imported consumer goods in Nigeria between the two months.