Analysts forecast 17.1% inflation rate for March

An Economic Intelligence Group at Access Bank Plc has predicted 17.1 per cent inflation rate for March attributable to slower increases in the food and non-food divisions.

The National Bureau of Statistics (NBS) will on April 15, 2017 release the inflation rate for the month of March 2017. The Bureau had announced 17.78 per cent inflation rate for February 2017.

They noted that further decline would be the second consecutive month that the pace of annual inflation slowed after increasing for fifteen straight months.

They explained that, “The expected decline in the pace of inflation in March reflects a favourable base effect from the previous year which offsets slightly higher food prices seen in March.

“According to an independent survey, the highest price increases in the food index were recorded in the Fish, Vegetables, and Bread and Cereals groups.

“The currency appreciation in the parallel market witnessed in March (13 per cent month-on-month) should also serve to dampen inflationary pressures. Thus the Core Inflation Index is expected to extend its downward trend.”

The Economic Intelligence Group noted that probable market impact points include yields in the fixed income market might likely remain elevated in line with still-high inflation rate.

The report said, “Yields in the fixed income market are likely to remain elevated in line with still-high inflation rate. This will continue to induce asset reallocation from equities, there-by further encouraging bearish stock market. However, this may over time create entry opportunities in the equities market.

They explained further that monetary policy responses by Central Bank of Nigeria (CBN) will likely refrain from adjusting its benchmark interest rate immediately and maintain monetary policy rates.

According to the report, “despite the improving inflation profile, the CBN will likely refrain from adjusting its benchmark interest rate immediately. At double digits, inflation is still outside the monetary regulator’s target, thereby limiting the room for further monetary easing.

“With no change in rates expected, the focus will be on the central bank’s guidance and on its stance on liquidity,” the report added.