The research arm of Access Bank Plc – Economic Intelligence Unit (EIU) – has predicted that Nigeria’s headline inflation for January 2021 will rise to 16.64 per cent from 15.75 per cent recorded in December 2020.
The National Bureau of Statistics (NBS) is scheduled to release the inflation figure for January 2021 on February 15, 2021, based on the data release calendar available on the Bureau’s website.
According to Access Bank’s EIU, this will mark the 17th consecutive month of ascending inflation. The towering trend, it says, reflects the effects from economic recession triggered by the ongoing pandemic. “Our methodology entails the application of an autoregressive econometric model using lags of the composite consumer price index (CPI) and a survey-based inflation expectation within the same product definitions adopted by the NBS.
“Transportation and food prices continued to ascend reflecting higher petrol prices and food supply disruptions. Given this pattern, we expect the CPI to settle at 361.77 points from 355.91 in the preceding month,” the unit stated.
Although the reopening of land borders across the country played a role in price reduction for some products, the firm stated that the economy still reels from effects of the ongoing pandemic, electricity tariff hike, currency depreciation and economic recession, which all contributed to the price hikes in the month.
Prices of food and non-alcoholic beverages, the largest component in the consumption basket (with a weight of 51.8 per cent) majorly sustained a mixed trajectory in prices. Some of the items that trended upward include but were not limited to: garri (18.6 per cent), ogbono (14.3 per cent), beans (7.6 per cent), egg (7.2 per cent), vegetable oil (9 per cent), and sweet potatoes (8.3 per cent) while some items recorded price decline namely: tomatoes (38.5 per cent), onions (23.3 per cent), pepper (6.7 per cent) and foreign rice (four per cent).
“We expect a continued marginal yield environment in the government T-Bills market. Yields on the 3-month & 9-month treasury bills rose to 0.43 per cent and 1.36 per cent on January 29 from 0.35 per cent and 0.62 per cent, respectively, in the prior period.
The CBN unanimously left the Monetary Policy Rate (MPR) unchanged at 11.5 per cent at its last meeting held in January 2021. This was in a bid to hasten the economy recovery process, maintain price stability, provide cheaper credit to improve aggregate demand, stimulate production, support recovery of output growth and a competitive rate environment that stimulates the much-desired foreign portfolio inflows in the short to mid-term.
Nonetheless, the Access Bank EIU said that the CBN is likely to sustain policies that will cushion the negative effects of the coronavirus whilst enhancing overall economic growth.
– Media Report