Headline inflation is projected to increase marginally by 0.03% to 11.4% in February, thereby reversing the slide in January. This is likely to be as a result of an increase in aggregate demand during the election season. Most consumers had stocked up on household goods ahead of the February elections before its postponement. This created an illusion of higher demand and pushed up prices temporarily. We expect a normalization of the price trend after the state elections.
We do not anticipate a change in the monetary policy sentiment as a result of this marginal increase in the inflation level. The Central bank is likely to be unperturbed by the slight increase in the price level at this time.
In the attached bulletin, the FDC Think Tank shares its estimates for February inflation and its implications on the business and policy environment.
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