In an early inflation rate call for June, analysts at FBNQuest Research are projecting that growth in Nigeria’s inflation will further slow when the numbers come in from the state statistics office. The National Bureau of Statistics only recently released the inflation rate for the month of May also showing a slowing in inflation growth.
In their daily economic report, distributed Thursday, the analysts predicted that the rate of inflation will be as low as 10.8 percent in June from 11.61 percent in May. If this prediction pulls through it will be a decline of 81 basis points from May figures as well as the 17th consecutive decline since January 2017.
Declining food price inflation (still high) from 14.8 percent to 13.5 percent year-on-year was attributed as the main driver of the nation’s slow-paced inflation rate coupled with a slower growth recorded in core inflation, from 10.9 percent to 10.7 percent year on year.
With food price inflation recording the sixth consecutive monthly decline for reasons un-attributable to actions of the monetary policy committee (MPC), the analysts, insist that a rate cut by Nigeria’s Central Bank MPC is in order.
According to the analysts, the committee’s last communique barely acknowledged the steep decline in headline inflation and concentrated on the negative impact of the late passage of the 2018 budget (still awaited) and its expansionary stance.
The CBN’s MPC has maintained a hawkish stance of leaving monetary policy rate at 14 percent for close to two years now, for fear of triggering inflation. However, the “food price inflation which has now slowed in large steps for six successive months is not a response to the actions of the monetary policy committee (MPC), which has often observed that supply-side factors beyond its control have been responsible for the stubbornness of food price inflation” say analysts at FBNQuest.
“The MPC next meets after the release of the June inflation report. We have been calling for a rate cut on the basis of the disinflation trends, for which the committee would normally take some credit, and still hope for a cut of 50bps by year-end,” they said