Investment Firm Forecasts 34.25% Inflation Rate for June
Inflation rate has been forecasted to print at 34.25% in June, 2024 by one of the Nigerian leading investment banking firm, Cowry Asset Limited, ahead of data release by the National Bureau of Statistic (NBS) on Monday.
Inflation rate accelerated to 33.95% in May, 2024 marking 17 months of consistent worsening price index. Local consumers have seen steep increase in prices of goods and services across the market amidst negative exchange rate fluctuations.
The statistics office is expected to release inflation figure for June on Monday and analysts are holding diverge view about the consumer price index.
Some investment experts said base effects will set in for inflation trend for last months.
“In response to the ongoing inflationary pressures, the Nigerian government has unveiled a comprehensive plan for 2024, focusing on the six-month suspension of import duties, Value Added Tax (VAT), and other tariffs on staple food items, raw materials, and direct inputs for manufacturing.
“This includes agricultural production inputs such as fertilisers, seedlings, and chemicals, as well as pharmaceutical products, poultry feeds, flour, and grains”, Cowry Asset Limited said in a commentary note.
Nigerian government has announced plan to allow rice miller to import paddy rice at zero duty and value added tax (VAT) for an initial six-month period to boost local supply and capacity utilisation.
This ambitious agricultural reform programme aims to enhance domestic food production. However, the effectiveness of these initiatives in delivering tangible benefits remains to be seen”, the firm said.
Analysts said the CBN faces a dilemma at the next monetary policy committee on whether to continue tightening monetary policy or adopt a more cautious approach to monitor inflationary trends and key economic indicators.
“We anticipate that a moderate increase in headline inflation will likely lead committee members to favour maintaining a tightening stance, potentially raising rates by 25 to 50 basis points. Our projections estimate a headline inflation rate of 34.25% for June 2024”, Cowry Asset stated.
Food inflation remains a significant driver of the headline inflation index, reaching 40.66% year-on-year in May 2024, the highest level in almost two decades, according to data from statistics office.
Analysts attributed the surge to rising prices of essential food items, which continue to be significantly hindered by supply-side shocks arising from security challenges. On a month-on-month basis, food inflation decreased by 0.22%, from 2.50% in April 2024 to 2.28% in May 2024. #Investment Firm Forecasts 34.25% Inflation Rate for June
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