Despite an increase in the inflation rate to 12.3 per cent, financial analysts have said that the rate will decline to a single digit in 2013.

FSDH, in a report made available to our correspondent on Wednesday, stated that though inflation rate remained in double digit for December 2012, it would drop to single digit in 2013.

The FSDH Research had noted earlier that inflation rate will remain in double digits throughout the year 2012 as a result of the partial removal of the fuel subsidy in January 2012 coupled with the recent flooding in the country. “Going into 2013, we expect inflation rate to drop to single digit partly on account of base effects,” it said.

Prior to the release of the November inflation figure, the analysts had said that the inflation rate would hit a 12 per cent mark before the end of the year.

It was estimated that Nigeria’s headline inflation would rise considerably by 0.77 per cent to 12.47 per cent in November, from the 11.7 per cent recorded in October.

The latest Composite Consumer Price Index for the month of November 2012, released by the National Bureau of Statistics, showed that inflation rate year-on-year in Nigeria increased to 12.30 per cent in November 2012 from 11.7 per cent recorded in the month of October 2012.

According to the NBS, the CCPI stood at 140 points in November 2012, an increase from 139.2 points recorded in October 2012. The percentage change in the average CCPI for the 12-month period ended November 2012 over the average of the CCPI for the previous twelve-month period was 12.1 per cent, compared with 11.9 per cent in the month of October.

The Lagos Chamber of Commerce and Industry recently faulted the position of the MPC of the Central Bank of Nigeria over the retention of the benchmark lending rate at 12 per cent.

The LCCI, in a statement signed by its Director-General, Mr. Muda Yusuf, said the MPC’s decision to retain a regime of tightening was ill-advised and insensitive.

He said, “The reality of the current economic and business conditions is a cause for concern – escalating unemployment crisis; profit margins are declining; consumer demand is weak; prohibitive interest rates; decelerating economic growth and high mortality rate of small businesses.

“These conditions call for policy choices that would stimulate the economy, even at the risk of inflation. Boosting economic activities would increase output and invariably moderate inflation. We appreciate the concern of the CBN about inflation, exchange rate stability and the preservation of foreign reserves. However, given the present socio economic conditions, stimulating the economy should be paramount at this time.”

Source: Punch (written by Ademola Alawiye)