As inflation continues to race high, analysts forecast a further but mild rate hike at the monetary policy committee meeting scheduled to hold Monday and Tuesday while the naira heads to N1600 after weeks of stability.
The 296th meeting of the Monetary Policy Committee (MPC) is scheduled to be held today, Monday, July 22, and Tuesday, July 23, 2024.
The Olayemi Cardoso-led monetary committee has hiked rates three times this year by 750 basis points to 26.25 percent from 18.75 percent to fight galloping inflation.
Nigeria’s annual inflation rate ticked up to 34.19 percent in June due to rising food prices, but the CBN chief said inflation is projected to moderate to 21.40 percent by the end of the year within a range of 19.84 and 25.35 percent, from 28.92 percent in December 2023, putting a further rate hike in focus.
Analysts polled by BusinessDay said the monetary committee will likely increase the country’s lending rate as it aims to tame stubbornly high inflation.
“We do not expect aggressive rate hikes like previous meetings, but we project a 50–75 basis point hike next week,” Nabila Mohammed, investment analyst at Chapel Hill Denham, said.
Also, analysts at Coronation Research said in their report on Monday that “we expect a rise in the Monetary Policy Rate (currently 26.25 percent) of between 50 and 100 bps, given the rise in annual inflation from 33.95 percent in May to 34.19 percent in June.”
The National Bureau of Statistics will release selected food prices for June 2024 on Monday.
The food inflation rate quickened to 40.87 percent in June from 40.66 percent in May on the back of continued security concerns, especially in the food-producing region of the country.
The surge in food prices is forcing consumption of staples out of the reach of many, hurting household budgets and depleting savings.
The key drivers of this inflationary pressure include notable price hikes in essential food commodities such as millet whole grain, garri, guinea corn, etc.
Others are bread, cereals, yam (water yam, coco yam, potatoes, and other tubers), groundnut oil, palm oil, etc.
NBS to release a transport fare watch for June
The National Bureau of Statistics will be releasing transport fare data for the month of June on Monday.
In May, the average fare paid by commuters for bus journeys within the city per drop increased by 0.86 percent, rising to N976 from N967.76 in April 2024.
This information is based on the Transport Fare Watch for May 2024, which was recently released by the National Bureau of Statistics (NBS).
The NBS report further highlighted that, on a year-on-year comparison, the average fare paid by commuters for an intra-city bus journey per drop rose significantly by 50.26 percent, increasing from N649.59 in May 2023 to N976.08 in May 2024.
Furthermore, the Transport Fare Watch for May 2024 noted that, in terms of geopolitical zones, the average fare per drop for intra-city bus journeys was highest in the South South and South West zones of the country at N994.17.
This was followed by the North-East zone, where the average fare was N980.33, while the South-East recorded the lowest average fare at N928.00.
SOURCE: BUSINESSDAY
