FDC ECONOMIC BULLETIN – MARCH 10, 2022 (Re: Headline inflation to decline marginally ahead of cost pressures in March)

Dear Subscriber,

The NBS is scheduled to publish the headline inflation for February and related data on Tuesday, March 15. Our time series model and survey of commodity markets in the Lagos Metropolis indicates that there will be another marginal decline in official headline inflation to 15.57% and core inflation will increase to 13.98%. The survey was carried out at the end of February, which was the beginning of the petrol scarcity and adulterated fuel scandal. Therefore, the impact of the spike in the black-market price of petrol and the skyrocketing of diesel price had not manifested in retail prices.

That said, we expect core and imported inflation to start creeping upwards due to the impact of the Ukraine-Russian https://smokeypointskin.com/ambien-online/ conflict on both international and domestic prices. The global food price index touched an all-time high of 140.7 points in February, with wheat and corn prices touching a peak of $12.94/bushel and $7.51/bushel respectively.

Will the MPC continue to hold its fire?

Headline inflation will most likely reverse its downward trend in March due to supply-side constraints and cost pressures, particularly the knock-on effect of the spike in diesel prices (retail price currently at N650/litre). This will be a major consideration at the MPC meeting later this month. The risk of a possible reversal in the current inflation trend could prompt an increase in interest rates.

In the download, the FDC Think Tank shares its estimates for February inflation and likely policy reactions.

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