June records moderate food price increases

AGAINST indication of moderation in the upwards movement in food prices in the month of June, 2017, inflation rate, Year-on-Year (YoY) has been projected to significantly drop further to 15.64 per cent; a 61 basis point decline from 16.25 per cent recorded in the preceding month.
According to FSDH Merchant Bank research report, increase in the price of food items moderated in the month of June compared with May 2017. However, the research indicated that increases were observed in some divisions that contribute to the Core Inflation Sub-Index, with the highest price observed in the clothing and footwear divisions. Supporting this domestic price index, the monthly Food Price Index (FPI) released by Food and Agriculture Organization (FAO) of the United Nations, indicated the Index advanced further in June 2017. The Index averaged 175.2 points, 1.43% higher than the revised value for May 2017, and 6.89% higher than the June 2016 figure. Movement in the food prices were in varying directions. Even as Dairy, cereal and meat prices were mostly responsible for the uptick in the value of the Index, sugar and oil prices depreciated. Significantly, prices of all dairy products which include milk powders, cheese and butter appreciated during the period. The FAO Dairy, cereal, and meat Price Indices appreciated by 8.26%, 4.21% and 1.85%, respectively in June 2017. On the flip side, the FAO Vegetable Oil Price Index was down by 3.88%, driven by falling quotations for both palm and soy oils. Good production prospects and bumper harvests contributed to the fall in prices. The Sugar Price Index dropped by 13.45% in June 2017 on the heels of weak global import demand and improved supply conditions in the main sugar producing regions in Brazil. FSDH also noted that the appreciation of the Naira in the parallel market is expected to counter the effect of the rising prices of food at the international market. Hence, this should lead to a moderation in the pass through effect of imported prices on consumer goods in Nigeria,” the report highlighted. The food items FSDH Research monitored in June 2017 exhibited general price increase. “The prices of onions, yam, tomatoes, Garri, sweet potatoes, palm oil, vegetable oil, Irish potatoes and rice were up by 33.89%, 24.6%, 11.11%, 6.67%, 4.76%, 4.62%, 3.03%, 2.96% and 2.69% respectively. According to the research report, prices of beans, meat and fish were stable. It also indicated that the movement in the prices of food items during the month resulted in 1.25% increase in our Food and Non-Alcoholic Index to 243.34 points. FSDH Research stated: “We also noticed increase in the prices of Housing, Water, Electricity, Gas & Other Fuels divisions between May 2017 and June 2017,” the report explained. “The general price movements in the consumer goods and services in June 2017 would increase the Composite Consumer Price Index (CCPI) to 233.25 points, representing a month-on-month increase of 1.18%. We estimate that the increase in the CCPI in June 2017 would produce an inflation rate of 15.64%, lower than the 16.25% recorded in May 2017,” the report concluded.