The nation’s Statistics Bureau, (NBS) is scheduled to announce the November and possibly, the last inflation rate for the year on December 15, 2021
Some analysts say the over 15 percent, growth retarding rate, being maintained for some time would further moderate, but would still have no positive impact on impoverished consumers.
In fact CBN had consistently maintained that inflation rate above 12 percent is growth retarding.
According to its website, as at October, 2021, inflation rate stands at 15.99 percent.
For quite some years, inflation has been above the upper limit of the CBN’s target 9 percent.
In fact, our investigations show that declining prices of some items, particularly food stuffs, are not as a result of any positive market fundamentals, but basically consumers resistance, ocassioned by dwindling purchasing power.
“Even though the moderation in headline inflation is sustained, Nigerian inflation remains a ‘silent thief’.
It is still above the upper limit of the CBN’s target 9%. The CBN has also consistently maintained that inflation
rate above 12% is growth retarding,” says Bismarck Rewane, chief executive officer, Financial Derivatives Company, in the current FDC Economic Bulletin.
The foremost economist further said in the Bulletin that their econometric model is projecting that official headline inflation will decline again by 0.79 percent to 15.2 percent.
He said that their survey of Lagos markets showed that the prices of staple food items fell sharply by an average of 22.46% in the last year.
For example, a basket of tomatoes is selling for N20k (2020: N35k), onions – N45k (2020: N80k) whilst the price of rice and pepper remained flat.
However, “The general tapering of food prices is mainly as a result of harvests but also partly due to price resistance by financially embattled Nigerian consumers,” he further said.
Commenting further, he said, “In spite of the continued moderation in inflation, consumers are jittery about the possible impact of an
increase in the price of PMS to N340/litre in February. Also more scary is the fact that the price of cooking gas has remained stubbornly high at N12,000 per cylinder and diesel is selling for N345/litre.”
Nigeria’s high inflation rate, he said, is forcing ambitious investment in high yield asset classes especially crowd-funded agric tech.
However, the downside has seen most of these platforms crash and
the masses losing more money as against their initial goal.
Friday Ameh, Lagos based energy analyst believe that CBN’s fights against inflationary pressures have always been lost battles because of conflicting policy measures and lack of complimentarity between the monetary and fiscal policy measures.
According to Ameh the nation’s economic problems include over-reliance on oil and the economic diversification rhetorics peddled by successive regimes have rather achieved little.
However, it is important to note that while Nigeria’s GDP is highly diversified with 46 sectors, revenues from oil & gas form the basis of the government’s budget plans and is the principal forex earner.
Therefore, Rewane believes that “Diversifying government revenue will mean ‘growing the cake’ and then taxing it. This must be hinged on competitiveness which will only be driven by investments in infrastructure and policy reform that liberalizes markets.”
