Central Bank of Nigeria hint that inflation may continue to rise

The Central Bank of Nigeria on Tuesday said the country’s increasing rate of inflation over the past several months might continue to witness further increase till December this year.

In his address at the opening session of the 13th Annual Banking and Financial Conference in Abuja, the CBN Governor, Godwin Emefiele, said inflationary pressure persisted in the first and second halves of the year due to several factors.

This, he said, might continue till the end of this year, as he noted that in addition to the disruption to global and domestic supply chains as a result of COVID-19, inflation was exacerbated by the increase in Value Added Tax.

Other factors that raised inflation, according to Emefiele, include exchange rate adjustment and seasonal food supply shocks due to the onset of the farming season and other structural bottlenecks.

He said, “In any case we think that inflation may continue to tick upwards, maybe up till around October, November, December as we begin to see the positive effects of the harvest.

“But we are not comfortable by the fact that with the depreciation that we have seen in the currency this year, as well as the increase in price in energy for those who are wealthy and the manufacturing companies, that this will no doubt result in imported inflation.

“This is because our economy still remains somewhat significantly import dependent and so no doubt, this will further accelerate the level of inflation in the country.”

He told participants at the conference that inflation in July 2020 stood at 12.8 per cent, adding that the bank, however, expect inflation to begin to moderate towards the end of the fourth quarter, as the country approaches the harvest season.

This, he said, was along with the phased withdrawal on the restrictions of movement and other restrictions imposed as a result of COVID-19.

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