Analysts predicts 12.35% inflation rate for April on account of panic buy, FX adjustment
Analysts have predicted that inflation rate in April would rise to 12.35%. The prediction was hinged on panic buy of some household and other related items during lock down period.
The April 2020 inflation report by the National Bureau of Statistics (NBS) is expected to be released on the 15th of May 2020.
Ahead of the release, analysts at Meristem Securities Limited envisage an uptick in the headline inflation rate to 12.35%, from 12.26% reported in March 2020.
In an email, Consultants at LSintelligence Associates said it is not a rocket science to know that inflation rate for last month would be higher.
The firm stated that Nigerian paid abnormal prices for basic goods and service in the period due to lockdown.
“We expect speed of increase to faster than usual, maybe headline inflation rate of 12.40% for the month could make sense”, LSintelligence said.
Numbers of cases of the coronavirus disease surged past two million worldwide in the month of April.
So far, Governments across territories have employed heterodox measures – shutting borders and suspending economic activities – in a bid to curtail a further spread of the virus.
For the most part of April, a large part of the world was on lockdown.
In recent times, some countries are beginning to reopen, especially in the world’s largest market, where businesses are gradually resuming operations and consumption slowly gaining momentum.
“To put this in context, export data from China shows a 3.5% growth and a trade surplus of US$45.4 billion in April- the largest since December 2019, Meristem stated.
Analysts said the impressive export growth was spurred by the increasing global demand for medical supplies in the fight against the deadly disease.
“The month of April was the most turbulent for the global oil market, as the Western Texas Intermediate (WTI) closed in sub-zero (-USD37/barrel) territory at the futures market for the first time in history.
“As a result of lockdown measures put in place to curtail the spread of the COVID-19, global demands for oil plummeted, and oil storage facilities ran out”, analysts stated.
Meristem held that consequently, oil traders had to source for off-takers as it would have cost more to keep the commodity in storage.
“Ultimately, the fate of oil prices rebounding depends mainly on a pickup in global oil demand once lockdown are lifted across regions and economies are restarted”, Meristem remarked.
Panic Buying and Higher Input Costs Trigger Inflationary Pressures
According to the report on inflation, Meristem explained that the extension of the lockdown in Lagos, Ogun and Oyo triggered a second wave of panic buying, causing a spike in the prices of foodstuff and household consumables.
Analysts said the impact of the technical adjustment in exchange rate in March, along with the reduced supply of foreign exchange by the CBN is expected to trickle into input costs of manufacturers and suppliers, which would further drive up the prices of goods and consequently, the CPI.
“While we note the further reduction of PMS pump price to N123.50 from N125 in March, we expect it to have minimal impact on general price levels.
“We also acknowledge the inflationary impact of precautionary measures taken by some Governments (Germany, France, USA, India and Vietnam amongst others) to restrict the export of medical supplies and critical agricultural produce”, Meristem highlighted.
The firm stated that the export control could materialize into scarcity of the restricted products in importing nations, lending further credence to its stance of a significant uptick in the CPI in April, as Nigeria remains an overly import-dependent nation.
Analysts predicts 12.35% inflation rate for April on account of panic buy, FX adjustment
