Latest data on October Inflation as released by the National Bureau of Statistics, NBS shows that the Nigerian economy will need more time to get out of the economic doldrum.
Inflation rate for the month of October rose by 0.83% compared to 0.81% in September to hit 18.3% year on year for the month of October.
The outlook for October was not this bleak in September when inflation rose to 17.9% from posted in December. The report shows that the food sub index was a major pusher of the rate. The sub index rose by 0.86% from 0.81% in the previous months.
The implication of this skyrocketing inflation shows that the rate of growth might not slow down until it nears 20%. Analysts who spoke to Bloomberg are already forecasting a possibility of nearing 19% before the end of the year.
Nigeria’s woes was compounded by the incoordinate Forex policy of the central Bank of Nigeria as well as speculators who were hoarding and inflating rates offered to sell the Naira against the US Dollar in the parallel market.
The challenge going forward are enormous for the CBN as it will be under serious pressure to increase interest rates from 14% to close to 16%. The CBN will be holding its Monetary Policy Committee, MPC meeting on Tuesday 22nd of November, 2016. Decision on what to do with the interest rate will be taken.
Tightening interest rates will further dampen the economy and jeopardise any effort of the government to stimulate the economy. Commercial banks have already stop lending. They intensifying efforts to reduce their non-performing loans and further improve on the asset qualities.
Nigerians are expected to face more tough times considering the continuous fall in the price of crude oil and renewed militant activities in the Niger Delta.