Investment analysts project 12.43% inflation rate for May
- Headline inflation to print at 12.43% – Vetiva
- Lockdown easing to drive increase domestic consumers price – Afrinvest
- Moderating price of oil, weak Naira to impact of price level – Cowry Asset
- Steady increase in inflation to top MPC’s agenda – Meristem
Average prices of foods, transportation and health care among other needs have been projected to increase for month.
Investment bankers have estimated uptick in headline inflation rate for the month of May, projected to spike to 12.43%.
Vetiva Capital made the projection in research note that inflation rate will hit 12.43% in May due to anticipated rise in both food and core inflation.
In the latest report from the National Bureau of Statistics (NBS), the overall consumer price index surged 12.34% year on year in April from 12.26% in March.
The CPI which measures average change in prices over time of goods and services purchased by consumers has been consistently rising in recent time.
The retail inflation inched higher on the back of a faster rise in both food and core prices.
Then, annual food inflation accelerated to 15.03% year on year in April 2020 as against 14.198% in March 2020.
Meanwhile, core inflation printed at 9.98% as against 9.73% in March of the same year.
Prices of food items like bread, fish, tubers, vegetables & fruits and bread & cereals were the main drivers of inflation in April.
“We expect the battle against COVID-19, moderating crude oil prices and the depreciation of the Naira against the USD to negatively impact on the general price level in the coming months”, Cowry Asset Management stated.
Vetiva Capital also explained that COVID-19 price premiums inflate core prices year on year.
Analysts at the firm explained that save for the Housing, water, electricity, gas and other fuel sub-index, all the other sub-indices recorded a faster rise in prices compared to March 2020.
However, Vetiva highlighted that core prices rose at a faster pace by +25 basis points than food prices at 5 basis points.
“This was due to a faster rise in prices in some COVID-19 prone sectors (health, transport and restaurant & hotels) compared to food prices”, Vetiva stated.
The faster rise in prices in the vulnerable sectors reflects price premiums for services, amid steady demand, due to increased risk associated with rendering those services.
Specifically, Vetiva noted that the prices of health and transport services rose 23bps and 22bps m/m respectively in April 2020.
In the current month, Vetiva Capital expects the headline inflation to print at 12.43% year on year, due to an anticipated rise in both food and core rates.
“We expect food inflation to rise further to 15.09% year on year, as mobility restrictions persisted in May with more states involved from the start of the month.
Analysts predict weak purchasing power
The investment firm also expect core inflation to inch higher to 10.07
Average prices of foods, transportation and health care among other needs have been projected to increase for month.
Investment bankers have estimated uptick in headline inflation rate for the month of May, projected to spike to 12.43%.
%, as analysts anticipate that the pressure on transport and health service prices will persist through the month.
Afrinvest attributed the marginal increase in April reading to weak economic activity.
“We note the increase in double-digit core inflation at 10.0% from 9.7% in March 2020, the highest since April 2018.
“Likewise, food inflation was marginally higher at 15.03% from 14.98% respectively.
“This is despite the planting season and the disruption to the agriculture value chain in Nigeria due to COVID-19”, the firm highlighted.
Going forward, Afrinvest said it expects that the gradual easing of lockdown measures as well as the commencement of planting activities would drive a faster increase in domestic consumer prices.
The firm anticipates subsequent figures to more reflect the impact of the trade restrictions, exchange rate weakening and the recent VAT increase.
Investment analysts project 12.43% inflation rate for May
