Has to be above 16% to make sense to me https://t.co/kMNAsWTSYv
— Ugo Obi-Chukwu (@ugodre) July 13, 2016
The National Bureau of Statistics is expected to release the consumer Price index for the Month of June anytime this week with some analysts already predicting a gradual reduction in the price of Inflation.
However, at Nairametrics we expect to see an inflation rate that is above 16%. Anything less will warrant that we doubt the report of the NBS.
The prices of goods and services are still on the rise as the effect of the new exchange rate policy continues to spread round every single business in Nigeria. Nigerians have been experiencing a rise in the price of staple food items, electronics, car parts, Diesel, kerosene, cooking gas and transportation in the past few weeks. These are all real expenses and we have not seen any evidence that prices have tapered or remained stable.
Even The Federal Government is spending more on borrowing as interest rates on risk free government borrowing hit 14.9% per annum. This suggest that lending rates also remain above the 20% levels leaving businesses with no choice but to pass it on the consumers.
We do opine that inflation rate could rise to as high as 17% by the end of the year despite the harvest season being on the horizon. Local farmers will also have no choice but to reflect the cost of goods and services on their farm produce sending inflation rate higher.
We do not see any thing on the horizon that suggest prices of goods and services will be dropping anytime soon as we are firmly within the galloping inflation territory. Things could even get worse by the end of the summer as most Nigerian schools will expect to increase their school fees. Cost of educational materials both imported and made locally will also record price increases which will all result in a higher inflation rate for Nigeria.
Based on this, we believe an inflation rate above 16% is very much expected in June while July and all through to September will see inflation rates above 17% remaining within that range (but below 18%) for the remainder of the year.
The last time Nigeria recorded an inflation rate above 16% was in March 2005.