The Nigerian government will now look to keep the country’s runaway inflation at 11.95 per cent by the end of 2021, after its inability to hold it within a 2016 CBN-target range of between six and nine per cent.
The government hopes that taming food prices and the steep cost of doing business will help push inflation, which touched its near three-year high of 14.89 per cent in November, down to 11.95 per cent by the end of 2021, Zainab Ahmed, the minister of finance, budget and national planning, said this at a virtual presentation of the 2021 budget Tuesday.
The cost of living in Africa’s biggest economy has been rising every month in the 15 months to November, accelerated by the government’s closure of its land borders to all goods, a move seeking to curb smuggling and buoy self-sufficiency especially in food production.
Last month, President Muhammadu Buhari announced the removal of the embargo on four of Nigerian borders after 14 months in force.
“Inflation is expected to remain above the single-digit but we hope, working together with the monetary authorities, trade and finance, we can reduce inflation,” Mrs Ahmed said.
Headline inflation could spike to 15.4 per cent in December, Lagos-based Financial Derivatives Company said in a website commentary on Thursday. That means a 0.51% rise over the November level.
“The continued rise in the general price level is driven largely by forex rationing, output and productivity constraints, higher logistics and distribution costs,” it said.
“The comforting news is that the rate of increase in inflation is expected to decelerate, which means higher inflation at a slower rate.
“This could be interpreted to mean that the re-opening of the land borders and the harvest is beginning to taper inflationary pressures.”
December inflation figures are due from the statistics office any moment from now.
Nigeria is in the throes of its second recession since 2016, following a record oil crash in April that forced crude prices to plumb new lows, and the outbreak of the coronavirus, which induced a wide funding gap in government’s spending plan for this year.
A meeting of the monetary policy committee of the central bank, timed to hold next week, will seek to forge strategies that will help the economy navigate through the chaos and could keep the benchmark rate at current 11.5 per cent to sustain growth.
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