Inflation may rise further to 8.3% – Rewane

The Chief Executive Officer of research firm Financial Derivatives Company Limited, Mr. Bismarck Rewane, has said inflation may rise further from 8.2 per cent to 8.3 per cent.

He also said that money supply would increase in the second half of this year due to increase in government and security spending as the nation prepares for general elections next year.

Rewane spoke at the Lagos Business School Executive Breakfast meeting.

Money supply had increased to N15.93tn in June, representing an increase of 0.13 per cent month-on-month and 3.31 per cent year-on-year.

According to Rewane, another reason money supply will increase is that about N800bn Asset Management Corporation of Nigeria bonds will be due for payment within the second half of this year.

Consequently, the FDC boss said the possible increase in money supply and the impact of the automotive policy would drive the nation’s inflation figure up.

Resurgence in currency pressure, volatility of core inflation and fiscal overdrive are other factors that will combine to cause more inflation, according to Rewane.

He added, “The Lagos Chamber of Commerce and Industry has announced that business confidence in Nigeria is down by 5.1 per cent. This is blamed on a challenging business environment and the uncertainty in the economy.

“The consensus view by economic analysts is that there would be increased pressure and possible macroeconomic challenges as the election draw near.”

He explained that in June, there was a slight increase in inflation to 8.2 per cent but within the Central Bank of Nigeria’s target of six to nine per cent.

Rewane, who said the naira also remained stable with a slight appreciation at the interbank market, added, “The CBN is committed to defending the value of the currency. In August the naira is again coming under a speculative attack.”

According to the FDC boss, Ghana has an inflation rate of 15 per cent, while South Africa is grappling with a 6.6 per cent Consumer Price Index, with both the cedi and the rand under pressure.

“The EIU and Goldman Sachs’ projections paint a gloomy picture for the naira. The Big Mac Index/PPP analysis also shows that the naira is overvalued. As if that is not enough, Nigeria now has to battle with Ebola, which is threatening to spread in an economically vibrant city,” Rewane said.

[Punch]

2 Comments

1. 

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   • 

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