Access Bank Economic Intelligence sees November inflation climbing to 11.9%| The Access Bank Economic Intelligence Unit has stated that the nation’s November headline inflation would hit 11.9%, as analysts cited border closure, security issues in the food producing region as driving factors.
The largest bank in Nigeria Economic Intelligence department stated this in a report ahead of the National Bureau of Statistics www.nigerianstat.gov.ng schedule release of November inflation figure.
According to its data calendar, the NBS is expected to issue its monthly inflation report on 15th December, 2019
Headline inflation for November, 2019 is expected to edge to 11.90% from 11.61% recorded in October, 2019, the intelligence unit stated in a report.
It remarked that the uptick would represent the third rise after four consecutive monthly declines, following a peak of 11.4% in May, 2019.
“Shadowing the accentuated food prices month on month over the months, whilst transportation and other key core inflation items have remained relatively flat, we anticipate a rise in prices in November, 2019”, Access Bank said.
It stressed that as result, the Intelligence Unit expects Consumer Price Index (CPI) to settle at 304.92 points for the month, pushing year on year headline inflation to 11.90%.
Analysts at the bank said the forecasted surge in headline inflation reflects upward pressure imposed on prices due to the yuletide season, prolonged border closure and rising insecurity in the food producing areas.
It recalled that in November, prices of food and non-alcoholic beverages, the largest component in the consumption basket sustained a relatively mixed trend unlike previous months.
The intelligence unit said specifically, prices of farm produce such as potatoes, tomatoes, vegetables, cosmetics and beverages rose marginally while prices of items such as beef, cereals and milk fell in markets we monitored during the month.
At the parallel market, the Naira closed at N360/USD on November, 29 unchanged from the previous month.
“We see a flat yield in the open market operations (OMO) Treasury Bills market as CBN OMO ban, market limitation triggers investors excitement in the bond market which then resulted to lower bond yield”, Access Bank Intelligent Unit stated.
Yield on 6-Month T-Bills stood at 10.14% on November, 29 compare to 11.89% a month earlier.
On Monetary Policy front, Access Bank Intelligent Unit expects that the CBN would maintain the MPR at 13.5% against the backdrop of still fragile economic growth.
MPR at 13.5% still ensures a healthy real return and a competitive rates environment that stimulates the much desired foreign portfolio inflows in the short to mid-term.
“We note that the CBN is likely to sustain policies that are directed at enhancing financial inclusion, SME financing and commodity development initiatives”, the report reads.
Headline inflation rose by 36 bps to a seventeen-month high of 11.61% year on year in October 2019.
The surge was driven by the paciest inflation acceleration in 36 months, analysts at Cardinalstone had observed.
The surge in price level was driven by food inflation pressures, up 58 bps to 14.09% in October, which coincides with closures of key land borders across the country.
Analysts at Cardinalstone said they believe the pass-through from border closures muted the impact of an otherwise above average main harvest and a 7 bps moderation in core inflation to 8.88% year on year.