Contrary to forecast by pundits that inflation will peak between the months of July and August to between 14 and 15 percent, the rate released by the National Bureau for Statistics (NBS) for the month of July shows a marginal deceleration to 12.8 percent.

The All-Item less Farm Produce component of the inflation was chiefly responsible for the slow- down in inflation rate. The component dropped moderately to 15.0 percent year-on-year from 15.2 percent.

But the food component of the basket of goods and services remain a threat to the fight against double-digit inflation rate as it rose to 12.9 percent year-on-year in July from 12.0 percent recorded in the previous month.

Samir Gadio, analyst with Standard Bank, London said the Consumer Price Index (CPI) report for July suggests a month-on-month inflation decline to 0.2 percent from 1.2 percent in June and 0.3 percent in July 2011.

?This is certainly positive news since there was always a risk that annual inflation would spike in July-August due to low base effects in the time series (also, y/y inflation was in single digits over that period in 2011)?, he said.

He said this development has the potential to trigger another rally in the bond market in the near future following earlier gains generated by the announcement of the forthcoming inclusion of selected FGN bonds in the Government Bond Index and Emerging Markets (GBI-EM index).

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