Financial experts warn on inflation

Financial experts have urged the Monetary Policy Committee of the Central Bank of Nigeria to continue with its tight monetary policy, saying that the inflation rate was responding to it.
According to them, the consumer price index for the month of November, which dropped by 0.60 per cent to 12.80 per cent, from 13.40 per cent in October, showed that the inflation rate was dropping.
Analysts at the First Securities Discount House said that the latest inflation figure of 12.80 per cent represented the lowest level recorded since January 2010.
They noted that the declining trend in inflation rate recorded since September was a welcome development. According to them, investors in fixed income securities and other fund managers consider inflation rate in making investment decision.
The inflation rate had dropped for the second consecutive month in October to 13.4 per cent from 13.6 per cent in September.
The CBN Governor, Mr. Lamido Sanusi, had said in an interview in London that, ”For cosmetic reasons, it is extremely important to make sure that we attack inflation. The CBN is targeting an inflation rate of less than 10 per cent.”
The Managing Director, Lewix Financial Services Limited, Dr. Tunde Lewis, said in an interview that the monetary authorities had adopted a right approach by the tight policy.
He added, “If a single digit inflation rate is achieved and sustained, government is then in a position to achieve the other goals of adequate and accelerated rate of economic goal, low rate of unemployment or full employment, equitable distribution of national income and external balance of payment equilibrium.”
According to figures released by the National Bureau of Statistics, consumer price index for the month of November, 2010, showed that the year-on-year inflation rate in Nigeria dropped by 0.60 per cent to 12.80 per cent, from 13.40 per cent recorded in the month of October 2010.
The composite consumer price index stood at 112.8 points in the month of November, an increase from 112.7 recorded in October.
The percentage change in the average CPI for the twelve-month period ended November 2010 over the average of the CPI for the previous twelve month was 13.9 per cent, the same figure as the previous month.
Core inflation, which is all items less farm produce and energy, stood at 11.30 per cent year-on-year.
It would be recalled that the MPC of the CBN in its November meeting maintained its policy stance by leaving the monetary policy rate at 6.25 per cent and also adjusting the asymmetric corridor of interest rate by 200 basis points.