Fuel Scarcity, Festive Spendings Reverse Inflation Gain, Sets To Rise Again – FDC

Nigeria’s headline inflation is expected to rise to 15.94 percent in December 2017, from 15.90 per cent the previous month as a result of the impact of fuel shortage and seasonally increased in spending for Christmas celebrations, sealing hope of an early liquidity easing by the central bank, Financial Derivative Company (FDC) has predicted.
In its first economic bulletin for the year, FDC said the uptick in inflation would be a reversal of the 10-month trend of consecutive declines.
“This anticipated change in inflation is mainly due to seasonality, as December is characterised by higher spending (Christmas effect) and supply shocks caused by the fuel crisis,: the report stated.
The company headed by a renowned economist, Bismarck Rewane said the timing of this change in inflation figure could be detrimental to those hoping for the much-needed reduction in interest rates by the central bank this month.
The company board of economist, however, believed that the marginal increase will only be a temporary setback for Africa’s biggest economy and would not pose a major threat to price stability.
It said food inflation year-on-year is estimated to maintain its downward trend to 20.26 per cent
Nigeria, Africa’s top crude producer have faced acute fuel shortage since December, due to short supply as the state-run oil firm NNPC failed to import enough gasoline for local consumption, which usually jacks up during the festive period.
Consequent on the fuel scarcity, prices of essential good went up, while transport fare doubled in many cases, leaving many commuters stranded and many have bad Christmas as a result of the extended queue for fuel.
Black market dealers in the commodity made a kill with some selling a liter of fuel as high as N400 naira while some filling stations illegally hike the price above the 1N45 naira per litter official rate.
The rate-setting Monetary Policy Committee (MPC) of the central bank is expected to meet for the first time later this month, baring all unforeseen circumstance.
The central bank is yet to set its calendar for the MPC meeting for the year, fueling speculation that the committee may not meet this month due to lack of quorum.
Source: Reuters

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