Meristem Securities Limited analysts have projected rise in August inflation rate by 0.14% to 12.96%. The August 2020 Inflation report by the National Bureau of Statistics (NBS) is expected to be released on the 15th of September 2020.
Meristem stated that it envisages an uptick in the headline inflation rate to 12.96%, from 12.82% reported in July 2020.
Demand Pressures to Sustain Uptrend in Inflation
The price of petrol was adjusted downward from NGN143.80 per litre in July to NGN138.62 per litre in August. This was done within the new price modulation regime which seeks to reflect global oil market fundamentals.
According to the Nigerian Bureau of Statistics (NBS), food prices built momentum in July, with notable increases on food such as items like maize (+5.36%), rice (+1.23%) and yam tuber (+2.29%).
“We expect this uptrend in food prices to be sustained in August, given market realities remain largely unchanged.”
As lockdown measures eased across the country and international flights prepared to resume, the Apex bank announced its intention to being weekly FX sales to BDCs across the country in late August. Thus, rates at the parallel market moved from NGN/USD477 in the last week of August, to NGN443 this week.
We expect demand for non-food items (in preparation for school resumption and travels) and prices of production inputs to sustain the uptrend in core inflation. We also expect the food index to remain elevated as the low rainfall in August along with the existing supply shortage of agricultural produce will keep food prices high.
“Hence, we project an inflation rate of 12.96% in August.”