NECA wor­ries over bor­der clo­surein­duced in­fla­tion

The Punch - - BUSINESS NEWS -

THe Nige­ria em­ploy­ers’ Con­sul­ta­tive As­so­ci­a­tion has ex­pressed worry over the ris­ing in­fla­tion rate in the coun­try.

In­fla­tion rate leaped to a 19-month high of 11.85 per cent in Novem­ber from 11.61 per cent in Oc­to­ber, in­di­cat­ing a 0.24 per cent in­crease.

The Di­rec­tor-gen­eral, Neca, Dr Ti­mothy Olawale, noted that all sub­sets in the re­cent Na­tional bureau of Sta­tis­tics’ Con­sumer Price In­dex had in­creased.

He at­trib­uted the ris­ing fig­ures, most es­pe­cially, the food in­dex, to gov­ern­ment’s de­ci­sion to close the land bor­der in an at­tempt to curb food smug­gling.

Olawale cau­tioned on the cor­re­la­tion be­tween the in­fla­tion rate and the Trea­sury bills.

He warned that the T-bills rate of about 7.8 per cent against in­fla­tion rate of 11.85 per cent would send for­eign in­vestors out of the coun­try and bring down the value of the lo­cal cur­rency es­pe­cially, since the GDP posted only 2.28 per cent in real terms in the third quar­ter.

The Neca DG pointed out that hav­ing warned of the im­pli­ca­tions of the cen­tral Bank of Nige­ria ban­ning pri­vate in­di­vid­u­als and lo­cal non­bank­ing firms from buy­ing short-term se­cu­ri­ties through Open mar­ket Op­er­a­tions, the cur­rent sit­u­a­tion af­firmed Neca’s pro­jec­tions.

He said, “The bond yield has dropped, oc­ca­sioned by re­duced liq­uid­ity in the T-bills mar­ket and higher in­fla­tion. The CBN needs to re­view its pol­icy on the ban. ”

On the im­pli­ca­tions of the ris­ing in­fla­tion rate for the econ­omy, the Neca DG said that it could lead to lull in eco­nomic ac­tiv­i­ties and fur­ther de­cline in growth rate.

He said, “It is un­der­stand­able in eco­nomic term that in­fla­tion­ary pres­sure leads to de­cline in sav­ings, un­cer­tainty about fu­ture price lev­els, which could dis­cour­age in­vest­ments and likely lower cap­i­tal for­ma­tion in the econ­omy.”

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