Former Imo State Commissioner for Finance, and the National President of Capital Market Academics of Nigeria, Professor Uche Uwaleke, says given the major drivers of inflation in Nigeria, the federal government has a major role to play in line with the fiscal theory of the price level.
In an essay: ‘Near-term Inflation Outlook: Bleak Prognosis’, which he made available to newsmen, Uwaleke also stated that the inflation outlook in the near-term is bleak, adding that the 2021 budget projects an inflation rate of 11.95 per cent by December 2021.
Uwaleke, a former Head of Department in the Nasarawa State University, stated that all these, in addition to legacy issues such as insecurity, transportation bottlenecks, high fuel and electricity tariffs, would weigh on commodity prices, especially food, in July.
“A few days ago, the National Bureau of Statistics (NBS) reported a slowdown in headline inflation for the third consecutive month with June inflation rate at 17.75 percent. Although still elevated and higher than the Central Bank of Nigeria (CBN) upper band of 9 percent, it was a continuation of the slowdown in headline inflation which began in April 2021.”
He, however, observed that downside risks to inflation outlook suggested an end to the current disinflation soon, adding that a reversal may kick in as early as July.
According to him, barring base effects, which apparently played a major role in the downward trend in view of successive high inflation rates of 2020, factors likely to cause a spike in inflation rate for July include increased demand witnessed during the festive period, and the devastating impact of flooding reported in some parts of the country.
