Nigeria’s 19.64% July inflation rate not surprising – Uwaleke

Reacting to the July CPI report by the National Bureau of Statistics (NBS), Professor of the Capital Market at the Nasarawa State University, Uche Uwaleke said the increase in inflation rate was expected especially with rising globally inflation.

The NBS in its CPI report for the month of July released on Monday put Nigeria’s inflation at 19.64 per cent. 

The increase in headline inflation for month of July was expected against the backdrop of rising inflation globally on account of supply chain disruptions from the Russian Ukrainian conflict.

This outcome buttresses the argument that the monetary approach to tackling cost-push inflation does not lie in a hike in the Monetary Policy Rate.

Recall that the MPC in its meeting last month increased the MPR by 100 basis points in a bid to tame inflationary pressure.

Uwaleke insisted that high cost of petroleum production, high  electricity tariff, exchange rate challenges, and unabating insecurity will continue to push up inflation. 

“Rising government deficits and borrowing tend to compound the problem,” he stressed. 

The first Capital market Professor opined that core inflation has a lot to do with the recent scarcity of forex  and associated volatility in exchange rates.

“I also think the gap between the high inflation rate recorded in Kwara state, where food inflation was highest and Kaduna State were it recorded the lowest rate is the partly the result of high transport costs.

“In the light of the country’s current situation, the most effective way to tackle inflation is for the government to find a lasting solution to the seemingly intractable problems of fuel imports and insecurity while the CBN deploys more of its development Finance function in a targeted fashion.

“In view of the elevated inflation rate, I advise the government to postpone the implementation of the Telecoms and Beverage tax till the inflationary pressure is significantly subdued,” he said. 

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