Inflation rate falls to 3% in December

The food inflation sub-index of the inflation measurement declined from 20.30 percent to 19.42 percent in December, a still uncomfortably high figure which analysts say shows that Nigerians are still under pressure from rising food prices.

The Retail Prices Index (RPI), a separate measure of inflation, was 4.1 per cent last month, up from 3.9 per cent in November.

The report stated that it became 11th consecutive disinflation (slowdown in the inflation rate though still positive) in headline year -on- year inflation since January 2017. The Office for National Statistics said it's too early to say if the move is the "start of any longer-term reduction in the rate". On the other hand, inflation in manufactured products remained at the same level as before (2.6 per cent).

Inflation is expected to have peaked and fallen back a little from its near six-year high at the end of last year as supermarkets have kept prices low despite higher costs in the run-up to Christmas. But logic has always dictated that once the effect of the weaker pound had percolated into the real economy, it should then start to drop out of the year-on-year calculations 12 months later.

The RBI may also increase the rates if crude prices firm up further or there is a sharp rupee fall or if global monetary policy changes.

Brettell said if you strip out the Brexit noise, the UK's underlying economic situation doesn't look materially different from the rest of the developed world. Evidence of such a shift would likely lead policymakers to increase interest rates more quickly.

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"Big themes like an ageing demographic and the rise of disruptive technologies are exerting downward pressure on prices", he said.

British inflation eased off its post-Brexit vote high in December, official data showed on Tuesday, suggesting the financial squeeze on many households could be about to get a little bit easier.

Costs lifted by 2.7 per cent month-on-month in December, compared with a 0.2% rise for the same month in 2016.

Persistently high inflation also holds implications for people's savings, as inflation erodes the spending power of future interest payments and eats away at the worth of the original capital. Inflation for manufactured items remained the same at 2.61% in both November and December.

"However, the recent upswing in oil prices means we're likely to find the easing in inflation comes slower than previously anticipated".

  • Ronnie Bowen