Financial Derivatives Company (FDC) Limited has predicted that Nigeria’s headline inflation for July 2022 will rise to 19.25 per cent from 18.60 per cent recorded in June.
The firm, which stated this in its latest Lagos Business School (LBS) “Breakfast Session” presentation released at the weekend, noted that if the prediction comes true, it would be the 6th consecutive monthly increase in the inflation rate.
It, however, stated that “published data may be inaccurate” as there is no consensus about the actual level of inflation in the country and “actual price is much higher.”
As FDC put it, “headline inflation came in at 18.6 per cent in June. Our expectations (are) that it will increase further to 19.25 per cent in July. Anecdotal and empirical evidence at times diverge due to different sample size (national vs Lagos survey) (and) time lags.
According to the firm, “Nigeria’s Consumer Price Index (CPI) Basket is redundant,” having been last reconstituted 13 years ago (2009). It stated that the CPI basket ought to be reviewed every five years, as a number of things such as, demography, popula- tion and behavioural patterns, have changed.
The FDC, however, pointed that inflation is not a “Nigerian specific problem” given that inflation is currently at 40 – year highs in advanced economies. It noted that virtually all central banks, including the Central Bank of Nigeria (CBN) are trying to stem inflation with monetary tightening (hiking interest rates).
In a recent report, Access Bank’s Economic Intelligence Unit (EIU) had stated that: “The faster rise in the general price level is due to several factors. Firstly, imported inflation arising from the ongoing Russia-Ukraine war.
The crisis has aggravated supply chain disruptions which had existed at the onset of covid-19. Multiyear highs were recorded in inflation rate across many advanced economies. These price increases are transmitted into the Nigerian economy via high price of imported consumer and capital goods.”