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Inflation rate fell to 11.1% in Feb

By on March 26, 2011

Nigeria’s  inflation rate declined to an annual 11.1 per cent in February as against 12.1 in January. However, the rate remains above the Central Bank of Nigeria (CBN)’s target rate.

Experts attributed the current development to the various monetary policies put in place by the apex bank.

CBN Governor, Lamido Sanusi, signaled on March 4 he may lift the benchmark interest rate for a second time this year, as the government increases spending before next month’s election.

He had increased the rate by a quarter of a percentage point to 6.5 per cent on January 25 to help the central bank meet its target of bringing inflation below 10 per cent.

Rising government spending and an advance in liquidity as the CBN recapitalises commercial banks are “reasons for tightening” monetary policy, Sanusi said in an interview with a foreign news agency.

“Further rate increases will depend on the March inflation data,” he said.

While Nigeria is Africa’s biggest oil producer, it relies on fuel imports for more than 70 per cent of its domestic needs because of lack of refining capacity.

The government subsidises domestic fuel prices, boosting its spending as oil costs rise, increasing pressure on inflation. Crude oil reached $106.95 a barrel on March 7, a 29-month high.

Source : Tribune