Financial analysts have said that the monetary policy measures by the Central Bank of Nigeria cannot reduce the inflation rate to a single digit.

This is coming after the release of the July inflation rate by the National Bureau of Statistics Analysts at First Security Discount House, in their weekly report, said the cause of double digit inflation rate was structural in nature.

They noted that inflation rate would remain in double digits throughout the year as a result of the partial removal of the fuel subsidy in January 2012, which led to high prices.

They said, “The appropriate measure to gauge the inflationary pressure in the economy under the current situation, for policy decision making purposes, is the month-on- month inflation change.”

The Head, Research Africa, Standard Chartered Bank Group, Ms. Razia Khan, had said that rebuilding external reserves should be the policy priority of the monetary authorities.

She said, “Looking at things holistically, we do not believe that we will see a move to ease monetary policy, even following this inflation print.

“Inflation remains in double digits for now, leaving little room for complacency. While the slowdown in the economy may exert more influence on the price level in the future, it is not a given that we will see this offsetting supply-side drivers of inflation, especially in the event of further fuel price adjustment – which is becoming more of a budget necessity.”

Consumer inflation eased slightly to 12.8 per cent year-on-year in July, from 12.9 per cent year-on-year in June, data by the NBS showed on Friday.

According to NBS, food inflation, the largest contributor to the headline index, rose slightly to 12.1 per cent year-on-year in July, compared with 12.0 per cent in June.

Financial analysts had earlier said that the July figure would drop marginally to 12.82 per cent, from 12.9 per cent in June.

The analysts, in a report made available to our correspondent last Thursday, stated that the inflation rate should drop marginally due to the general adjustment and stability of consumer prices in July.

It said, “For inflation rate to increase to 13 per cent in July, the composite consumer price index must increase by 40 basis points month-on-month, which in our opinion is unlikely. Our estimates point to a marginal increase of 25 basis points in CCPI to 135.7 points in July, which will produce an inflation rate of 12.82 per cent, eight basis points lower than 12.9 per cent recorded in the month of June.”

Source: Punch/Ademola Alawiye