Nigeria sees slower inflation rate this year as economy grows
By Chijioke Ohuocha
ABUJA, Jan 16 (Reuters) - Nigeria expects the rate of
inflation to fall faster this year compared with 2017, banking
on the economy and currency to stabilise, but activities
leading up to presidential elections next year could stoke
Yemi Kale, head of the National Bureau of Statistics (NBS)
told Reuters the country met its inflation target last year as
projected in a reform document meant to get the economy growing
again after a recession in 2016.
Nigeria's inflation slowed for the 11th month in a row in
December, to 15.37 percent from 15.90 percent a month
Kale expects prices to continue to drop.
"We are getting back to more predictable rates of inflation
based on consumption; harvest and planting seasons rather than
cost-push factors," Kale told Reuters in an interview in Abuja
"I expect inflation to slow between now and mid-2018."
Pre-election spending could stoke prices, however, he said.
Nigeria will hold presidential elections on Feb. 16, 2019
and political parties have between Aug. 18 and Oct. 7 this year,
to select their candidates.
In October, Central Bank Governor Godwin Emefiele said he
expected inflation rates to fall at a faster pace and reach the
high single-digits by the middle of 2018.
The rate of price increases would also depend on central
bank interest rate policy or regulatory induced price pressure
such fuel or electricity price hikes, Kale said.
The central bank has kept its main interest rate at 14
percent for over a year now as it battles inflation and seeks to
attract foreign investors to support the naira.
However, the government wants to see rates come down to
lower its borrowing costs and stimulate the economy.
"FX rate is stable and the impact on inflation is much
stable, which means that the central bank's ability to depend
the naira has increased," he said
However, food price index have remained in high double
digits. It declined to 19.42 percent in December from 20.30
percent in November.
Kale said the country was in a harvest period and output is
increasing which would help lower food prices. But added that
household consumption was still fragile after the recession.
"If oil price is maintained and the exchange rate is stable
then consumption expenditure will improve. We don't see any
immediate risk to oil production and oil price seems way above
the budget benchmark price, all that points to stronger GDP
numbers," he added.
The International Monetary Fund (IMF) has forecasted a GDP
growth of 2.5 percent for Nigeria this year. Kale said that was
(Reporting by Chijioke Ohuocha Editing and graphic by Jeremy
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