By Stanley Opara

Wednesday, 8 Dec 2010

Nigeria has the second highest rate of inflation among 12 major oil producing nations in the world, investigation by our correspondent has revealed.

The country’s inflation rate, which is currently 13.4 per cent, according to the National Bureau of Statistics, comes second after that of Venezuela, which has an inflation rate of over 27.5 per cent.

Venezuela is about the 11th largest oil-producing nation with an output of about 2.6 million barrels of crude oil per day, while Nigeria, which produces over two million barrels of crude oil per day, ranks 12th in global oil production.

Saudi Arabia, which is the highest oil producing nation with a capacity of over 10.8 million barrels per day, had an inflation rate of 5.8 per cent as at October 2010. November figures for the country are not available.

Others on the list are: Russia, the United States, Iran, China, Norway, Canada, Mexico, United Arab Emirates, Kuwait, Venezuela, Nigeria and the United Kingdom.

The US has the lowest inflation rate, which, as at November, was less than 1.2 per cent. It has a capacity for 8.5 million barrels per day.

Russia, Iran, China, Canada and Mexico have inflation rates of about seven per cent, 9.7 per cent, four per cent, 1.8 per cent and 4.2 per cent, respectively, for November.

The UAE and Kuwait, however, have inflation rates of 1.9 per cent and 5.1 per cent respectively.

Analysts have urged the Central Bank of Nigeria to mop up excess liquidity in the system so as to further reduce inflation rate in the economy.

Nigeria‘s inflation rate dropped for the second consecutive month in October to 13.4 per cent from 13.6 per cent in September, due to good harvest in the country‘s damped food sector.

A former lecturer at the University of Lagos and Consultant Economist, Prof. Kayode Familoni, said double digit inflation was still on the high side for the Nigerian economy given the possibilities of a reduction.

“Although, there has been an improvement in the inflation rate, the fact remains that any double digit inflation rate is considered high. The target should be single digit,” he said.

Familoni said the financial authorities should embark on monetary and fiscal tightening and that government should also refrain from wide and excessive spending.

He, however, urged the CBN to be independent enough to play its role effectively as a monetary authority, adding that the government should be cautious with borrowing.

The CBN had raised its Monetary Policy Rate to 6.25 per cent in September, as part of measures to reduce inflation rate.

Source: Punch