As business activities pick up and the value of the naira remains stable at both the official and parallel market ends, analysts say they expect the rate at which prices of goods and services in the country rose to decline further in September.
They are optimistic that inflation which had begun to slide downward in February this year would slip further to 15.9 per cent in September.
August inflation figure released by the National Bureau of Statistics was 16.01 per cent.
This will make it the eight consecutive decline in inflation figures in the country.
According to analysts at Financial Derivatives Company Limited, (FDC), the sustained but marginal reduction can be partially attributed to the effect of tight liquidity in the system, evidenced by a contraction in money supply by 11.06 per cent to N21.85 trillion in August.
The analysts who projected an inflation of 15.99 per cent said, “we noticed a widespread ease in commodity prices, usually associated with early harvest. We also expect month-on-month inflation to decline to a one year low of 0.81 per cent (10.16 per cent annualized) from 0.97 per cent (12.28 per cent annualized) in August.
“This reduction is partially due to a slight appreciation of the naira and availability of forex in the market during the period under review. This has been complemented by an improvement in power supply, which increased from an average of 3,352.97MW/hr to 3,432.97MW/hr in September.”
For analysts at FSDH Merchant Bank, inflation for September will drop to 15.96 per cent. The decline they say is largely attributed to the downward movement in food items, as well as decrease in some non-food items.
The FSDH analysts while noting that food prices at the global market was on the rise said “the prices of most of the food items we monitored in September 2017 moderated downwards, while a few major items recorded price appreciation.”
However they noted that the appreciation of the naira in the inter-bank and parallel markets should douse the impact of the increase recorded in the prices of food at the international market.
“Our analysis indicates that the value of the Naira appreciated at both the inter-bank and parallel markets in September 2017.
“The value of Naira gained marginally by 0.03 per cent to close at N305.75 to the dollar at the inter-bank market and appreciated by 0.68 per cent to close at N365.50 to the dollar at the parallel market at the end of September 2017, compared with August 2017.”
