Nigeria’s business climate and economic parameters are suggesting that the country may sustain its current single-digit inflation up until the end of the year, notable economists in the country have said.
Inflation rate refers to a general rise in prices measured against a standard level of purchasing power.
For a significant part of this year, Nigeria’s economy has been on single-digit inflation, with its rate hovering around nine per cent.
In May, Nigeria’s annual inflation rate dropped to nine per cent, from 9.1 per cent in April as increase in food prices eased and the impact of last year’s higher fuel prices slowed down, figures released by the National Bureau of Statistics in June showed.
The Chief Executive Officer, Economic Associates, Dr. Ayo Teriba, on Thursday predicted that Nigeria could sustain the single-digit inflation, saying, “Lack of inflationary pressures at the moment will make the inflation rate in the country to continue in single-digit for the remainder part of this year.”
According to Teriba, credit is currently weak in the country and the economic parameters show that the nation may not go out of the single-digit for a relatively long time.
He said, “If you look at the economy, you see that there are not inflationary pressures at the moment. I cannot see inflationary pressures. The state of emergency in three states in the North has paralysed economic activities in those states. So, when you look at that coupled with what is happening in the economy generally, you will believe that we will continue in single-digit for the remainder part of this year. So single-digit inflation rate is sustainable for some time.”
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, also believes single-digit inflation rate is sustainable, considering the state of the economy.
According to him, there is currently no ‘underlying threat’ to the single-digit inflation rate in the economy and as such the country may not dip to double-digit.
He said, “There are no issues with the volume of money in circulation, the exchange rate, or adjustment in wages. We can only look at costs generally. We can look at cost push and demand push inflation. We look at the cost of power and other costs generally. Then, you look at the spillover effect of the removal of the oil subsidy in the beginning of this year.
“When you look at the state of the economy and the inflation rate, you will discover that there are no underlying threats at the moment. So, we can say that single-digit inflation rate is sustainable.”
But the Chief Responsibility Officer, Valueinvesting, Mr. Seye Adetunmbi, had last year said the country required a lower single-digit inflation rate, adding that the lower the single-digit rate, the better for the nation.
He said, “Single-digit inflation rate is no doubt good, yet 9.9 per cent is not good enough; the lower the single-digit rate, the better for the nation.”
“Reducing the rate to the desired level requires a lot of conscious efforts that will boost the cost-effective production of goods and services as well as reduce excessive dependence on imported finished.
Historically, from 2006 to 2013, Nigeria inflation rate averaged 10.59 per cent, reaching an all time high of 15.60 per cent in February 2010 and a record low of three per cent in July 2006.
The NBS, in the report released by the Statistician-General of the Federation, Dr. Yemi Kale, in June, said, “The Consumer Price Index, which measures inflation, rose by 9.0 per cent year-on-year in May, slightly below the 9.1 per cent rate recorded in April.
“The increase in food prices captured by the Food Sub-index, while significant, is also lower year-on-year. Through the first five months of 2013, the Food Sub-index has averaged 10.0 per cent, 1.8 per cent lower than the rates recorded over the same period last year.”