Inflation Rate to Drop and PMI Falls Further

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Monday, March 05, 2018/ 01.20 PM / FSDH Research 


·     FSDH Research expects the inflation rate (year-on-year) to drop to 14.31% in February 2018 from 15.13% recorded in the month of January 2018. 

· The expected decrease in the inflation rate is largely attributable to the base effect of previous year. 

·  FSDH Research notes that there is a potential increase in local prices of imported food items because of the faster than expected increase in international food prices. This may have negative impact on inflation rate going forward 

· Our revised average inflation rate forecast for the year 2018 stands at 10.76% lower than 16.55% in 2017. 

· However, we maintain that the yields on the FGN Bonds will rise, in the short-term, higher than the current levels. 

·  FSDH Research observed a slowdown for the Purchasing Managers’ Index (PMI) for the second consecutive month. 

·  The Composite Manufacturing Index (CMI) dropped from 59.3% in December 2017 to 57.3% in January 2018 and to 56.3% in February 2018. 

· 
Although the PMI figures are above 50 points, the slowdown may reflect the rising uncertainties in the country. 

·   Policy makers and economic mangers in the country need to pay urgent attention to the declining trend in the PMI in order to nip it in the bud. 

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