Downward trend of inflation rate is sustainable – Experts

By Stanley Opara

Friday, 22 Oct 2010

Financial experts in Nigeria have said that the country can maintain a downward trend of its inflation rate.

They said this could be realised if the Central Bank of Nigeria continued to implement the right monetary policies given the peculiarities of the Nigerian economy.

They made the observation on the heels of the Nigerian inflation easing to 13.6 per cent in September this year after attaining a 13.7 per cent mark in August.

The National Bureau of Statistics had earlier this week, said Nigeria‘s consumer inflation eased to 13.6 per cent year-on-year in September from 13.7 per cent the previous month, with growth in food prices, which form the bulk of the inflation index basket in the country, dropping to 14.6 per cent year-on-year from 15.1 per cent in August.

Speaking with our correspondent on Thursday, the President/Chairman of Council, Association of National Accountants of Nigeria, Mrs. Iyamide Gafar, said if the CBN continued on its effort to ensure stability in the financial system, rising prices (inflation) would be effectively checked and controlled.

She said there was the need for the apex bank to constantly monitor the system, and ensuring that its directives to players in the financial arena were strictly adhered to and implemented.

According to Gafar, there was the need for the regulator to check the consumption culture of the Nigerian people and ensure that the economy was not in any way threatened by the prevailing consumption behaviour which is a major economic index.

“Our appetite for locally-made goods and services should be boosted. Importation of things that are readily available in the country should be discouraged. Arbitrary importation is one thing we must check,” the ANAN boss said.

The CBN unexpectedly raised its benchmark lending rate for the first time in more than a year last month to 6.25 per cent from 6.0 per cent, switching its attention from boosting growth to battling inflation.

Higher government spending ahead of elections due next April, according to experts, is likely to keep upward pressure on inflation, which has also risen this year due to an official data revision in August.

Asked about the interest rate outlook in sub-Saharan Africa‘s second biggest economy, the Governor, CBN, Mr. Lamido Sanusi, told Reuters this month it would depend on ”where we see inflation going.”

A consulting economist, Dr. Kayode Familoni, said the Monetary Policy Committee should formulate a stabilisation policy regime of aggressive liquidity mop up, if a single digit inflation rate must be achieved

He maintained that double digit inflation rate would continue to erode the purchasing power of fixed income earners.

He had also said, ”If a single digit inflation rate is achieved and sustained, government is then in a position to achieve the other goals of adequate and accelerated rate of economic goal; low rate of unemployment or full employment; equitable distribution of national income and external balance of payment equilibrium.”


Source: Punch

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