With less than three days to the release of the July inflation rate, financial analysts have said that the July figure would drop marginally to 12.82 per cent, from 12.9 per cent in June.

The analysts, in a report made available to our correspondent on Thursday, stated that the inflation rate should drop marginally due to the general adjustment and stability of consumer prices in July.

It said, “For inflation rate to increase to 13 per cent in July, the composite consumer price index must increase by 40 basis points month-on-month, which in our opinion is unlikely.

“Our estimates point to a marginal increase of 25 basis points in CCPI to 135.7 points in July, which will produce an inflation rate of 12.82 per cent, eight basis points lower than 12.9 per cent recorded in the month of June.”

The analysts added that the decrease in the CCPI would be influenced by the strength of the appreciation in the value of the naira against the United States dollar between June and July, stability in prices of rice, as well as the decrease in the price of tubers and vegetables; compared with the observed negative impact of increase in wheat prices and the negligible impact of the increase in electricity tariff on consumption expenditure.

The report said, “General prices monitored by FSDH Research for the month of July showed that there was stability in the prices of rice, while prices of bread increased as a result of the increase in the price of wheat and sugar. Also, electricity cost increased because of the new tariff system. Prices of tuber and vegetables dropped marginally due to the harvest season, especially coming from yam and its impact on other tubers.”

The inflation rate for June 2012 stood at 12.9 per cent, an increase from 12.7 per cent recorded in the month of May 2012.

The Food and Agriculture Organisation, in its latest report for July 2012, noted that food prices surged in July following three consecutive months of decline.

The FAO Food Price Index, which measures the monthly change in the international prices of a basket of food commodities, released on August 09, 2012, showed that the FFPI averaged 213 points in July 2012, up 3.9 per cent from June.

According to the FAO, the sharp rebound is mostly driven by a jump in grain and sugar prices, and a modest increase in oil and fats.

However, international prices of rice remained mostly unchanged in July.

The report also noted that by contrast, international prices of meat and dairy products remained unchanged.

Further analysis showed that the value of the naira appreciated against the US dollar in the month of July by 0.06 per cent compared with the depreciation of 0.12 per cent in the month of June.

Source: Punch/Ademola Alawiye