Dear Subscriber,
The NBS is scheduled to publish its inflation report for March on (April 15th). Our time series model and survey of major commodity markets in the Lagos Metropolis indicate that official headline inflation will slow by 0.06% to 21.85%. Other inflation sub-indices are also expected to move in a similar direction. Food inflation is projected to fall to 23.82% from 24.35% while core inflation could slow to 18.54% from 18.68%. The decline in the headline inflation will be the first drop since December 2022.
The projected moderation in inflation can be largely attributed to the Naira cash scarcity, exchange rate appreciation and a sharp drop in the price of diesel. In the month of March, the Naira gained 0.67% to close at N750/$ at the autonomous market. Also, the price of diesel fell by 14.29% to N700/litre.
The MPC will be meeting very close to the May 29 handover date and is unlikely to make any major move
Despite the projected decline in inflation in March, inflationary pressures remain potent. The revalidation of the old naira notes as legal tender will have the effect of increasing the cash in circulation by over 25%. The risk of higher prices will require the CBN to be more innovative in its inflation containment strategies. These and other major considerations will dominate the thinking of the committee at its next meeting in May.
In the download, the FDC Think Tank shares its forecast for March inflation and likely policy reactions.
Do enjoy your read…….
