Analysts at FSDH Merchant Bank Limited stated this in a report. They anticipated that inflation rate (year-on-year) would drop to 12.43 per cent in April 2018, from the 13.34 per cent recorded in the month of March.
The National Bureau of Statistics (NBS) is expected to release inflation rate for April on May 13, based on the data release calendar on its website.
The investment bank said despite the increase recorded in the prices of some food and non-food items, the base effect of the Composite Consumer Price Index (CCPI) in April 2017, would depress the inflation rate.
It indicated that the value of the naira depreciated at both the Nigerian Autonomous Foreign Exchange (NAFEX) and parallel markets. According to the report, the value of the naira depreciated by 0.09 per cent and 0.14 per cent to close at US$/N360.17 and US$/N363 respectively at the NAFEX and parallel markets at the end of April.
“The rise in the international prices of food coupled with the marginal depreciation in the value of the naira led to an increase in the prices of imported consumer goods in Nigeria between the two months under review.
“The prices of certain seasonal food items we monitored appreciated in April 2018, leading to 0.86 per cent increase in our Food and Non-Alcoholic Index.
“This index increased year-on-year by 14.71per cent, up from 234.39 points recorded in April 2017. We also observed an increase in the prices of Transport and Housing, Water, Electricity, Gas & Other Fuels divisions between March and April. “We estimate that the increase in the CCPI in April would produce an inflation rate of 12.43 per cent lower than the 13.34 per cent recorded in March,” it added.
Also, the Financial Derivatives Company Limited projected inflation rate for April to reduce to 12.7 per cent, adding that food inflation likely to reach point of inflection soon.
It, however, identified likely risks to further drop in inflation to include the passage of 2018 budget, increased election spending and growth in broad money supply (M2).
Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele recently said the central bank would continue to work towards a single-digit inflation rate.