Renowned financial analyst, Bismarck Rewane, Chief Executive Officer (CEO) of Financial Derivatives Company (FDC) Limited has warned inflation could cross the 12 per cent mark January, 2020 as a result of increase in diesel price and the rise in liquidity.
“Our market survey in January reveals that headline inflation is likely to inch up to 12.05 per cent from 11.98 per cent in December 2019. If this forecast is accurate, it will mean that inflation has increased for five consecutive months. This will be a major concern for the policy makers”, a publication of FDC yesterday said.
The Monetary Policy Committee (MPC), at its last meeting, emphasized the determination of the CBN to rein in inflation because of its negative impact on Gross Domestic Product (GDP) growth and unemployment.
The survey also expect food and core inflation to move in tandem with the headline inflation, rising to rise to 14.7 per cent and 9.4 per cent respectively.
The good news though is that the incremental change in the price level is now down to a mere 0.07 per cent from 0.36 per cent in October 2019. This is primarily because the base year effects of the border closure is losing steam and consumers’ purchasing power is squeezed.
The report said, impact of the Central Bank of Nigeria (CBN)”s unorthodox policies has been a sharp decline in interest income, which has resulted in a reduction in aggregate consumption. The minimum wage impact has also been benign as Federal workers account for an insignificant proportion of the national workforce and some of the states are yet to commence payment. However, money supply growth and higher logistics cost continue to stoke inflationary pressures.
