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Access Bank: inflation’ll contract to 15.02% - THE NATION

MARCH 12, 2018

Inflation rate (year-on-year) will contract to 15.02 per cent in February 2018 from 15.13 per cent recorded in January 2018, Economic Intelligence Group of Access Bank has shown in its latest forecast.

The Group noted that National Bureau of Statistics (NBS) is scheduled to release the inflation figure for February 2018 on March 14, 2018, based on the Data Release Calendar available on the Bureau’s website.

The Group, in an emailed report yesterday, said: “Our methodology adopts an autoregressive analysis of past prices, while it recognises all the assumptions used by the NBS in its computation of monthly composite consumer price index (CCPI).

“Looking in more detail at the drivers, our analysis indicates that the continuing trend of slowing inflation rate in February reflects a drop in food prices and stability in the currency.

“In February, prices of food and non-alcoholic beverages, the largest component in the consumption basket (with a weight of 51.8 per cent) fell slightly. Based on our survey, prices of food items notably Irish potatoes, tomatoes, and pepper ticked downwards in February.”

It said February’s easing of price pressures also reflects stability in the core index which excludes farm products and energy prices, owing to ongoing consistent FX supply by the Central Bank of Nigeria (CBN) and the appreciation of the naira on the parallel market. The value of the Naira settled at N363/$ in the parallel market on February 28th compared to N364/$ a month earlier.

The forecast also said February’s easing of price pressures also reflects stability in the core index which excludes farm products and energy prices, owing to ongoing consistent FX supply by the CBN and the appreciation of the naira on the parallel market. The value of the Naira settled at N363/$ in the parallel market on February 28th compared to N364/$ a month earlier.

“While we believe the falling inflation rate will support looser monetary policy in the coming quarters, we nonetheless expect the CBN to adopt a relatively cautious stance when it comes to making rate cuts for fear of triggering any weakness in the local currency.

“With no change in the benchmark rate anticipated, we expect the CBN to continue issuance of OMO (open market operation) and Stabilisation Securities with focus on curbing naira liquidity to manage USD demand.”

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