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Why FSDH is forecasting a slight increase in Nigeria’s inflation rate


FSDH Merchant Bank Limited has projected a minor increase in Nigeria’s inflation rate to 11.39 percent in May 2019, up from the 11.37 percent that was recorded in April.

The prediction: The Head of Research at FSDH Merchant Bank, Mr. Ayodele Akinwunmi, disclosed this at a media briefing on its monthly economic and financial markets outlook for June which is titled “Economy in Need of Boosters: Priorities for a Second-Term”. He explained that the main factors that determine inflation are the changes in the prices of Premium Motor Spirit (PMS), electricity, and other commodities.

“The major issues that will drive inflation are PMS and electricity adjustment which I think is very important.”

Why inflation? Akinwunmi further explained that inflation rate might increase by 2.5 percent because of a possible change in the pump price of PMS and electricity tariff.

Progression to regression: Before now, the country’s inflation rate had been on the path of decline. From December to March, the inflation rate was on the low. However, by April, it rose up as a result of the increase in the prices of food items.

Doubting single digit inflation: With the recent developments, it might be slightly difficult for the country to achieve the single digit inflation that the Central Bank of Nigeria (CBN), projected it would achieve before the end of the fourth quarter of the year.

Effect of inflation: One of the major disadvantages of inflation is that it would cause foreign investors to withdraw investments from the economy. This could negatively affect the economy’s growth rate.

About the company: FSDH Merchant Bank Limited was incorporated in June 1992, as the first discount house to operate in Nigeria. In the new era, FSDH Merchant Bank Limited was one of the first merchant banks to be granted a license to operate in Nigeria as a merchant bank.

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