How Nigeria can achieve single digit inflation rate in 2019

…Experts urge CBN to stimulate demand, boost purchasing power

Motolani Oseni

Following the fall of Nigeria’s annual inflation rate to 11.37 per cent in January, down from 11.44 per cent posted in December, financial experts have predicted that single digit inflation figure could be achieved, but only if 2019 budget is passed early and tight monetary policy is maintained. The latest January inflation data released by the National Bureau of Statistics (NBS), showed improvement while compared with 11.44 per cent recorded in the preceding month, with the price index peaked at 18.7 per cent in January 2018 and has been in double digits for three years. Reacting to this development, analysts have projected a further drop in the nation’s inflation rate but charged the Central Bank of Nigeria (CBN) to stimulate demand and boost purchasing power to achieve single-digit inflation rate. A chartered stockbroker and Chief Executive Officer, Sofunix Investment and Communications, Mr Sola Oni, said that the recent drop in the nation’s inflation rate to 11.3 per cent was due to a decrease in political spending. “The recent 0.007 drops in Nigeria’s inflation rate to 11.3 per cent in January as against 11.44 per cent in December cannot be isolated from the decrease in political spending and other forms of economic activities”, Oni said. He said that the apex bank needed to stimulate demand and boost purchasing power to achieve a single-digit inflation rate. “A drop in the inflation rate from economic perspective carries along some benefits such as increased competitiveness of the country’s products and services, encouragement of investment and better returns for savers, among others”, Oni said., Also, Professor of Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, Sheriffdeen Tella, said that single digit inflation rate could be achieved with the quick passage of the budget in the first quarter or early second quarter. Tella said that the country would expect a further drop in inflation “if budgets are passed in time and implementation starts in the first quarter or early in the second quarter”. He added that inflation figure could also drop to single digit if the Central Bank of Nigeria (CBN) continued to maintain the tight monetary policy. Tella, however, enjoined the apex bank to continue to promote products through funding of appropriately specialised banks to stimulate economic activities. He said that fall in the inflation rate during the period was expected due to improvement in domestic production, particularly with respect to agriculture.