January 2016 Inflation Rate Expected to Drop - FSDH

According to FSDHGroup Research: We expect the January 2016 inflation rate (year-on-year) to slow down to 9.24% from 9.55% recorded in December 2015. The moderation in the inflation rate would be as a result of the base effect of January 2015 and the drop in commodity prices. The National Bureau of Statistics (NBS) will release the inflation rate for the month of January 2016 on February 17, 2016.

The major highlights of the report are:

• We expect the January inflation rate (year-on-year) to slow down to 9.24%
• The food prices in the month of January at the international market fell by 1.93%
• The value of the Naira depreciated both at the inter-bank and parallel market
• We expect the Composite Consumer Price Index (CCPI) to increase by 0.55% to 181.13 points

The prices of commodities that the Food and Agriculture Organization (FAO) tracked in the Food Price Index (FFPI) for the month of January 2016 dropped by varying degrees.

Our analysis indicates that the value of the Naira depreciated at both the inter-bank and parallel market by 0.01% and 11.91% to close at US$/N199.10 and US$/N306.50 respectively. Despite the decline in global food prices, the higher depreciation in the value of Naira, particularly at the parallel market, led to an increase in the prices of imported consumer goods in Nigeria between the two months under review.

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