Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Opinions Blurb

The Latest Drop In Inflation Rate Could Be A Blip?

Nairametrics by Nairametrics
March 19, 2017
in Blurb
Nigerian Agricultural Sector To Receive N84bn Boost

Food inflation

Share on FacebookShare on TwitterShare on Linkedin

Nairametrics| The National Bureau of Statistics released its 2016 February consumer price index confirming inflation rate for the month of February was 17.78%. This was the first drop since 2015.

The latest inflation rate suggest prices may have started moderating as the impact of “base effects” tapers down any further month on month rise. Analysts believe that because of the onetime jump in fuel prices and electricity tariff experienced last year, the inflation rate could trend further down.

RelatedPosts

Equity market gains N43 billion in market cap to erase previous day’s loss

EFCC battles black market to boost naira, local currency gains N60 to $1 within a week

Analysts who adopt a more cautious view to the outlook for the year, consider the latest inflation rate as a blip. The cite the fact that there are still a lot of products and services that are yet to reflect the rising cost of input. Most businesses are cutting cost in other areas just to maintain market share but may soon run out of steam as the economy worsens. This argument is logical considering the periodic spike in household food items observed by our research team.

Whilst we agree with both observations, we are more inclined to look at factors that could trigger a further hike in inflation rates.

News continues after this ad


Hike in electricity tariff

The power sector is long overdue for a minor review of its electricity tariffs. A minor review is triggered any time there are major changes to inflation rates, exchange rate and gas prices. The last time tariffs were increased; it was based on an inflation rate of just above 9%. At the current rate of 17%+ power companies are well in line to request for a minor review. If this occurs, the pass on effect will be felt on the inflation rate.

News continues after this ad


Petroleum product price increase

Nigeria increased fuel prices around May last year by about 66%. This more than any other factor contributed to the increase in the prices of goods and services in the country. Fuel importers are now saying that Nigeria is due for another price hike. The claim is that products are currently being subsidized by the government as landing cost of fuel is now above the retail price of N145. A likely increase sometime this year, could push inflation rates higher.

Another round of devaluation

Since the CBN devalued the Naira in June 2016, the exchange rate has depreciated by more than 35% in the black market. In fact, we now have over 9 exchange rates with each trading at a premium of between 5% to 40% of the official rate of N305. Oil marketers who still manage to import are only able to do so if they can secure enough dollars and at the official rate. The NNPC is currently subsidizing products just to ensure that the pump price of fuel remains at N145. If oil prices stay above $50 for the rest of the year (quite unlikely) then we expect a major change in prices as the year goes.

Natural disaster

There is also an unlikely but plausible threat of a natural disaster occurring this year. A major drought or heavy rainfall could damage food harvest expected in the latter part of this year. Whist we hope this will not be the case, it will be wrong to rule out a likely occurrence of a natural disaster upsetting any inflation model projected for the year.

 

Related

Tags: Black MarketConsumer Goodsinflation rateOIl and Gas NewsPower Sector

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

inq
avatrade
Stanbic bank
Mega Millions
UBN
Hot forex
Access Bank
Bankers Committee
First bank






    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • Can Elon Musk buy Manchester United?
    • Darkness: Unions shut down TCN stations across Lagos
    • Google invests over $1.5 billion into Blockchain companies in 10 months

    Follow us on social media:

    Recent News

    Elon Musk’s Tweets: Should one man have all that power?

    Can Elon Musk buy Manchester United?

    August 17, 2022
    Power Generation Jumps Above 4,000mw

    Darkness: Unions shut down TCN stations across Lagos

    August 17, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Financial Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Metrics
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • Business News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com