Contrary to speculations in some quarters that Nigeria’s inflation rate is set to continue on its upward trajectory due to the impact of the coronavirus (Covid- 19) pandemic, analysts at FBNQuest Research have forecast that the rate will remain unchanged at 12.8 per cent this month. The National Bureau of Statistics (NBS) had on Monday released its July Consumer Price Index (CPI) and Inflation report which showed that inflation rose, for the 11 consecutive months, to 12.82 per cent from 12.56 per cent in June. Experts said the development was due to factors such as the increase in Value Added Tax (VAT), pump price of fuel, border closure, Covid-19 impact on supply chains and insecurity in the food belt regions of the country, adding that given the uncertainty about the pandemic, the inflation rate is likely to continue to head north until a vaccine is found for the disease.
However, in a note obtained by New Telegraph yesterday, analysts at FBNQuest stated: “Based on the recently released personal statements from the latest monetary policy committee meeting, one of the committee members expressed that inflation risks in the economy are generally stemming from food supply bottlenecks, exchange rate pressure, energy cost and system liquidity. This is in line with our thinking. Our take is that the headline rate will remain unchanged at 12.8 per cent y/y in August.”
The analysts suggest that the upward trend in inflation in recent months was occasioned by the effects of the coronavirus lockdown restrictions and that the gradual lifting of the restrictions could reduce the impact of the current factors that are pushing up prices. They said: “The highest increases in core inflation were recorded in pharmaceutical products, hospital services and passenger transportation by road and air among others. The Covid-19/lockdown effect is therefore still visible.”