Cordros: Inflation Will Hit 34.98 Per Cent This Month
Analysts at Cordros Capital analysts have disclosed that inflation will hit 34.98 per cent this month.
The analysts stated that consumer prices maintained the uptrend, rising by 150 basis points (bps) to 33.2 per cent year-on-year in March “due to exchange rate pass-through on consumer prices, lingering structural challenges impeding food supply, elevated gas and energy prices and unfavorable base effect from the prior year.
“Thus, food prices (+209bps to 40.01 per cent y/y) remained at a 19-year high, while core inflation (+77bps to 25.90 per cent y/y) is at its highest level since March 2004 (32.60 per cent y/y). However, on a month-on-month basis, the headline inflation moderated by 10bps to 3.02 per cent m/m, primarily due to the moderation in food price increases.
“In the near term, we expect the headline inflation to be influenced by the base effects from the prior year, the recent hike in electricity tariffs and increased demand that accompanied the Eid-el-Fitr festivities. Consequently, we now look for a m/m headline inflation of 3.27 in April, translating to a y/y reading of 34.98 per cent."
Meanwhile, record showed a turnover of 1.6 billion shares worth N32.3 billion in 44,915 deals by investors on the floor of the exchange, up from a total of 1.1 billion units, valued at N28.7 that changed hands in 21,921 deals during the preceding week.
The financial services industry (measured by volume) topped the activity chart with 1.1 billion units valued at N22.4 billion traded in 26,192 deals; thus contributing 71.9 per cent to the total equity turnover respectively.
Second place was the conglomerates industry with 117.6 million shares worth N1.6 billion in 2,501 deals. Following this was the oil and industry, with a turnover of 92.6 million shares worth N810 million in 2,621 deals.
Analysts advised the investors to critically think on the trading and investing strategies to stay ahead of the game, in the face of higher interest rates and yields in alternative investment windows, amid mixed economic data and ongoing reform policies of the government.
According to Cordros Capital, “We anticipate a continuation of bearish sentiments, especially with the likelihood of profit-taking following the recent announcement regarding the suspension of the Dangote Foods merger and ongoing reactions to the recapitalisation exercise in the banking sector.
“In the short-medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and corporate actions.”
On the price movement chart, the equities market continued its bearish trend for the fifth consecutive week, as profit-taking activities on tier-one banking stocks drove the market lower.
Subsequently, the NGX All-Share Index and market capitalization fell by 2.7 per cent to close the week at 99,539.75 and N56.296 trillion respectively.