For the first time in over three years, inflation, the average rate of change in the prices of goods and services will drop to a little over 11 per cent in the month of August, analysts have predicted.
This development is tied to a robust harvest season.
The National Bureau of Statistics (NBS) is scheduled to release the July 2019 inflation figure on Friday, 16 August 2019.
The inflation rate target of the Central Bank of Nigeria (CBN) is between six per cent and nine per cent.
However, as noted in previous inflation reports, it is unlikely that Nigeria will achieve a single-digit rate of inflation in the short-term.
“We must also note that an increase in the inflation rate is not entirely bad, as a reasonable increase in general prices is important to encourage production. No manufacturer will be encouraged to produce in an environment when the prices of the goods that are produced are going down. What most countries and central banks are guarding against is an excessive increase in general prices” said analysts at FSDH Research.
In the last few years, the apex monetary authority has been initiating several policies to help promote the agricultural sector. The aim of this is to boost agricultural yields, which would in turn kerb general price increases.
The CBN’s focus on the agricultural sector is deliberate, as food prices signicantly affect the country’s ination rate. Looking at the movement of food prices in the international market, the overall price of a basket of certain food items dropped in July relative to June 2019.
In its July 2019 Food Price Index, the United Nations Food and Agriculture Organization (FAO) observed that the prices of food items in the international market decreased during the month. The FAO further noted that the prices of cereal, dairy products and sugar decreased between June and July 2019. The drop offset the increase in the prices of oils and meat recorded during the same period.
