Increased Electricity Tariffs, Automotive Policy to Drive Inflation Higher

The relative low and steady inflation rate enjoyed since late last year may soon be a thing of the past if the threat posed by increased electricity tariffs, automotive policy-induced panic buying of vehicles, disbursement of capital votes and steady growth in money supply are sustained.
Bismarck Rewane, chief executive officer of Financial Derivatives Company is convinced that there will be a resurgence in inflationary pressure. 
Rewane added that the planting season is another reason why food prices will go up, thus fuel increased inflation.  
He noted that FDC’s urban inflation rose by 0.51 percent due to the seasonal increase in the food and non-food indices.
According to him, non-food basket up by 0.76 percent to 10.39 percent, while food basket inched up 0.02 percent to 9.16 percent.
 Due to declining market inventory, he said Nigeria currently has an inflation gap of -1.58 percent, annualized M2 growth.
It will be recalled that President Goodluck Jonathan signed the 2014 budget into law on May 21st.
N4.695 trillion budgeted for overall expenditure, N286.37 billion for SURE-P, making a total of N4.964 trillion.
N4.98 trillion was budgeted in 2013. N273.5 billion was for SURE-P in 2013, N712 billion budgeted for debt servicing.
Current oil production at 1.9mbpd is 20 percent below budget benchmark. Brent Crude is trading $109.17, 40 percent above budget benchmark of $77.5pb.

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