Nigeria’s rate of inflation is projected to fall for the first time in 14 months to 18.3 per cent when the December data is released according to a note by analysts at the Financial Derivatives company.
It will represent a 1.18% decline from November’s inflation rate and it will be the first time that headline and month on month inflation will switch trajectories.
According to the note, “this can be attributed to waning base year effects. However, we do not expect this development in the monthly rate to be a permanent one.
“The change in direction is what the fiscalists and doves in the monetary policy committee need to support arguments for an accommodative monetary policy stance to complement the fiscal stimulus.”
Economists say even if estimates actualize and inflation declines, it is still a mile away from the CBN’s comfort zone of 6-9%.
A December decline coinciding with a sharp increase in the PMI is good news. It might be an indication that consumer resistance to retail price increases may be driving prices down. It might also project that a high inventory level and borrowing cost environment are coaxing producers to bring down their prices.