Analysts have predicted that the Consumer Price Index (CPI) for February 2017, expected to be released this week, would decline for the first time in about 16 months.
Headline inflation spiked to 18.72 per cent in January as a result of an unexpected jump in food inflation and the impact of record high diesel price at N275 per litre. In January, the core and monthly indexes declined contrary to the direction of headline inflation.
The National Bureau of Statistics (NBS) is scheduled to release the inflation figure for February 2017 on Wednesday, based on the data release calendar on the bureau’s website.
To this end, the Economic Intelligence Group of Access Bank Plc anticipated that inflation rate (year-on-year) would moderate downwards to 18.1 per cent in February 2017, from the 18.7 per cent posted in January 2017. As usual, the bank’s analysts said in their methodology, they adopted an autoregressive analysis of past prices, while they recognised all the assumptions used by the NBS in its computation of monthly composite consumer price index (CCPI).
“We forecast inflation rate (year-on-year) to decline to 18.1 per cent from 18.7 per cent reached in January 2017. The expected dip in the year-on-year inflation reading will be largely driven by base effects. Base effects refer to the influence of the consumer price changes of the corresponding month of the previous year on the changes in the annual inflation of the current year’s respective month.
“From our investigation, there was an increase of 3.8 points in the consumer price index (CPI) to 219.5 points in February 2017 from January, a slower increase compared to the rise in the corresponding period of 2016 when the CPI rose by 4.19 points to 185.89 points in February 2016 from the January 2016 number.
“Largely, the slow rate of change forecasted for February 2017 is due to the higher CPI base witnessed in 2016. Recall, there was an FX depreciation of about 11.7% at the unofficial market in February 2016. The pass-through effect of this depreciation impacted market prices and consequently CPI,” they predicted.