Following the recent rise of the nation’s inflation to 16.47 percent in January, a financial analyst has predicted a further increase in price of goods and services by March this year.
The analyst predicted that inflation rate may grow as high as 17.13 per cent by March, as global oil price, insecurity, and electricity tariff continue to rise.
Data from the National Bureau of Statistics data had shown that the inflation rate of 16.47 per cent in January represents an increase from the 15.75 per cent recorded in December 2020.
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The rise according to Robert Omotunde, Chief Investment Officer, Afrinvest Asset Management Ltd, is in line with expectations, following the pressure points experienced in 2020.
He explained that the different shocks in 2020, ranging from currency devaluation, lock down of borders which are now being re-opened, increase in pump price of petrol, increase in electricity tariff had impacted on the CPI in 2020.
He said, “Starting from 2019, the closure of borders, increased price of petrol and electricity, the lock down and devaluation of the currencies are all factors that have contributed to the price pressure we experienced in 2020.
“This current rate of 16.47 is expected and it will get worse. Expectation for February inflation will be as high as 16.94 percent, and 17.13 percent in March.
Omotunde, who was featured on TVC Business Nigeria show, noted that insecurity has also contributed to the high inflation rate especially the food inflation which is currently at 20.57 percent in January 2021 from 19.56 per cent in December 2020.
He said, “Insecurity issues have also continued to affect food inflation in the country couple with some other isuses around exchange rate, and increased import cost.”
He, however, said that the rate may begin to moderate in April, with further decline leading to a headline inflation rate of ten percent by December 2021.
He said, “The high base effect of 2020 will support the headline inflation of March, till April when we would begin to see moderation and descending. All things being equal we would expect that it will drop to ten percent by December.
“The governmnet would say they are trying their best with the distribution of paliatives, and the Central Bank intervention programs just to cushion the effect.
“The truth remains that whatever will fundamentally change the standard of living of the people cannot be a palliative, it has to be a deliberate policy that would address critical sectors of the economy that can create jobs and increase the earning power of people.”