Inflation drops for seventh consecutive months to 16.01%

  • As NECA gives panaceas for sustained economic growth

The National Bureau of Statistics on Friday released the Consumer Price Index report, which measures inflation, with the rate dropping year-on-year from 16.05 per cent in July to 16.01 per cent in August.

The bureau, in the report, which was made available to our correspondent, said August was the seventh consecutive month that the index would be declining since January this year.

On a month-on-month basis, the report stated that the headline index increased by 0.97 per cent in August, representing a 0.24 per cent point decline over 1.21 per cent recorded in June.

The report read in part, “The Consumer Price Index, which measures inflation, increased by 16.01 per cent (year-on-year) in August 2017. This was 0.04 per cent points lower than the rate recorded in July (16.05 per cent), making it the seventh consecutive decline in the rate of headline year-on-year inflation since January 2017.

“On a month-on-month basis, the Headline Index increased by 0.97 per cent in August 2017, 0.24 per cent points lower from the rate of 1.21 per cent recorded in June.”

The NBS report stated that food inflation increased to 20.25 per cent year-on-year in July, down marginally by 0.03 per cent points from the 20.28 per cent recorded in July.

On a month-on-month basis, the report said the food sub-index increased to 1.14 per cent in July, down by 0.38 percentage points from 1.52 per cent recorded in July.

Speaking on the drop in inflation rate, finance analysts attributed the decrease to various factors such as transparency in the foreign exchange market and intervention of the Central Bank of Nigeria in ensuring liquidity in the foreign exchange market.

A former Managing Director of Unity Bank Plc, Mr. Rislanudeen Mohammed, told our correspondent in a telephone interview that while the intervention of the apex bank had reduced the level of core inflation, such success had not been recorded in the area of the food index.

He said that more work needed to be done in increasing food production as well as addressing the impediments to agricultural production.

Mohammed stated, “The pace of decline in the inflation rate is largely due to transparency in the management of the foreign exchange market as well as the recent interventions of the CBN in that segment of the market.

“But while the core inflation seems to be coming down due to the transparency in the forex market, the food index is still a source of concern and it calls for more attention in that area.”

In the meantime, Employers’ Consultative Association, NECA, yesterday, in Lagos, reviewed the nation’s economy in the wake of recent reports by the National Bureau of Statistics, NBS, that the country has exited recession, and listed some measures to be adopted by the government to sustain the economic recovery and growth.

After giving details of its analysis sectorally, NECA President, Mr. Larry Ettah, stated: “Our review of the NBS Gross Domestic Product data shows that the marginal growth recorded in Q2 2017 is weak and fragile.

Additional  measures are required to ensure growth is sustainable and economy does not relapse into recession.

We recommend very strong and concerted implementation of the Economic Recovery Growth Plan, ERGP, in order to boost confidence of both local and foriegn investors in Nigerian economy and generate additional investment which appears critical to building a sustainable recovery.

“We are of the opinion that government needs to adopt specific, targeted and effective policies to attract and promote private capital investment in the Nigerian economy, especially into infrastructure and industry.

So far, it does not appear as if the rhetoric in ERGP to make markets work and leverage private capital as the engine of growth has been matched by appropriate policy responses.

“With regard to inflation, we are worried by the continued rise in goods prices with domestic food inflation reaching 20.3 per cent in July 2017 according to NBS data.

We suspect this trend is connected to conflicts between herdsmen and farmers in vast areas of Nigeria’s North Central region,  the country’s food basket, alongside forex conditions making food exports attractive thereby exacerbating local scarcity. We urge government to take firm actions to end these conflicts.

More so the recent floods in the region may affect harvest  further worsening the situation.”

We retain the view that domestic interest rates are too high for the productive sector and monetary policy must abandon its tightening posture to both reduce interest rates and support better GDP growth.”

Punch with additional report from Vanguard