FSDH Merchant Bank has projected a further decline in the inflation rate to 11.29 percent in March. The inflation rate declined for two consecutive months from 11.44 percent in December to 11.31 percent in February, according to data from the National Bureau of Statistics (NBS). “FSDH Research expects the March inflation rate to drop marginally to 11.29 percent from 11.31 percent in February 2019”, the bank said in its inflation watch report announced recently.
The bank further added: “If our estimate comes true for March 2019, it means that the first quarter of the year 2019 was a good quarter for the Nigerian economy as FSDH Research expects the inflation rate to drop further in March. FSDH Research’s latest review of food prices and other major items that make up the Consumer Price Index (CPI) basket (alcohol beverages, clothing and footwear, housing, water, electricity, gas and other fuels and etc.) suggests that the inflation rate should reduce further in March. The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) cited the moderation in the inflation rate since January as one of the justifications for a cut in the interest rate in March 2019.
“Our preliminary checks also suggest that imported inflation rate (i.e. prices of goods using imports as raw materials) lessened in March. The marginal appreciation in the value of Naira in March compared with the relative stability in the prices of food items on the international market provided a gain on the prices of consumer items in Nigeria
“The increase in the global price of crude oil in March and increase in the inflow from the Foreign Portfolio Investment (FPI) led to the appreciation in the value of the Naira. The value of the naira at end-March at N360.47 per dollar compared with end-February at N361.13 per dollar indicates that the value of the naira strengthened by N0.66. “Although our expected inflation rate forecast is still higher than the target of the CBN, the relative low inflation rate may encourage the issuance of Commercial Papers (CPs) that will enable corporates to fund their short-term capital requirements.”