As the nation awaits the official inflation figures to be released this week by the nation’s Bureau of Statistics, (NBS), some analysts see further hardship for the overburdened consumers as September readings would show marginal rise.
This is even as prices of goods and services, particularly, food stuff, have continued to rise on daily basis, in addition to the higher transportation cost, ocassioned by arbitrary hike in the price of petrol.
This is despite relentless efforts by the Central Bank of Nigeria (CBN) to tame the scourge of inflationary pressures, for which analysts say is Governor Yemi Cardoso’s biggest challenge.
They said it will once again resume with its upward trajectory for the month, ending the third quarter of the year.
This is even as some Nigerians thought respite may be on the way following the dip in the annual headline inflation to 33.4 percent in July, followed by a further decrease to 32.15 percent in August for the first time in 19 months.
The development created the closest gap between the interest rate and inflation seen this year.
Consequently, the improvement led many analysts to project a ‘hold’ on further tightening before the last Monetary Policy Committee (MPC) meeting. However, in a surprise move, the MPC opted for another 50 basis-point hike.
But the analysts see recent higher petrol prices pushing the inflation rate for the month of September to 32.3 percent ahead of the National Bureau of Statistics (NBS)’s report.
Specifically, Cardoso and his monetary committee have raised Nigeria’s benchmark interest rate five times, by a total of 850 basis points, in a bid to combat the menace of inflation and as well attract foreign investments.
The action has put the local lenders under stress with higher lending rates charged on facilities, further worsening the frosty relationship between them and the wary customers.
CBN has continued to cite the recent economic developments, typified by inflationary pressures and foreign exchange market instability as basis for the hikes.
The Governor also cited the threats of food inflation, widespread flooding, and rising petrol and energy prices as reasons for further monetary tightening.
These concerns prompted analysts to adjust their inflation forecasts for September.
Analysts at the Financial Derivatives Company Limited, led by foremost economist, Bismarck Rewane have projected that headline inflation will increase marginally by 0.22 percent to 32.37 percent, driven by the new petrol prices, exchange rate volatility, and flooding in northern Nigeria, which would negatively impact agricultural production.
“In the same vein, we anticipate a moderate increase in month-on-month inflation by 0.16 percent, rising to 2.38 percent from 2.22 percent,” the report stated.
Last week, NNPC increased petrol prices again, from N950 to N998 per litre in Lagos, and as high as N1,030 in the northeastern states—the second increment in two months.
Nigerians, already struggling with limited disposable income, are facing fresh pressure as transportation and commodity prices soar in response to the petrol price hikes.
Also, businesses are bearing the brunt of rising energy costs, with the increased cost of loans leading them to pass expenses down to consumers.
They further argue that the imbalance between monetary discipline and fiscal measures are part of the reasons why inflation in Africa’s most populous nation has remained persistently high
At the last MPC meeting, Cardoso emphasised, “Oil production has got to be ramped up to the level that will carry the economy. I think we are all ongoing witnesses to the efforts that are being made in that sector. It has to happen.”
He added, “We need to diversify our economy. There is only so much that a central bank can do. Without the fundamentals in the right position, we will continue to sub-optimise.”
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Infact, some analysts have attributed the continued poor showing of the local currency, naira against other foreign currencies to monthly disbursements from the Federation Account Allocation Committee (FAAC), actions that have made governance at the sub national level complacence and less innovative in tapping from the abundant natural resources in their domain to enhance their internally generated revenue (IGR).
Friday Ameh, Lagos based analyst posited that the upward revisions of PMS (petrol) prices in recent times would affect the positive impact of tbe monetary policy measures by CBN.
Ameh also said that given the fact that PMS prices in other states are higher than in Lagos, we are likely to witness far reaching effect on the September headline inflation, with possible marginal increase.
Under President Bola Tinubu’s administration, the naira has lost about 70 percent of its value, averaging N1,511.34/$ at the Investors and Exporters window this year.