New Telegraph

FDC predicts 12.8% inflation rate for July


Inflation rose for the 10th consecutive month in June


Despite the harvest season, inflationary pressures are likely to persist in the country, and would hit 12.8 per cent in July 2020 from 12. 56 per cent in  the previous month, analysts at Financial Derivatives Company (FDC) have said.


The analysts made the prediction in the firm’s Lagos Business School (LBS) Breakfast Session presentation for August 2020 obtained by New Telegraph at the weekend


The analysts said inflation was likely to cross the 13 per cent threshold this month, adding that this would be driven by factors such as the increase in PMS price by three per cent to N148.7/liter, the increase in Brent crude price by 5.96 per cent to $43.20pb and exchange  rate pass through effects.


Other factors that would stoke inflation, according to the analysts include the closure of the 3rd Mainland Bridge in Lagos, which could contribute to urban inflation nudging higher to 14 per cent , as well as cost reflective electricity tariffs, expected to commence in September 2020.


Should the analysts’ forecast of an increase in the inflation rate for July, come to pass, it would be the eleventh month in which the rate has headed north.


The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) had at its meeting last month cited inflationary pressures as one of the reasons why it left rates unchanged.


The committee left the Monetary Policy Rate (MPR), popularly called lending rate, unchanged at 12.5 per cent. Other parameters that were retained include the Cash Reserve Requirement (CRR) at 27.5 per cent, Liquidity Ratio at 30 per cent and the Asymmetric Corridor at +200/-500 basis points around the MPR.

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