Inflation rate to stay at double digit, says report

Nigeria’s inflation rate which has dropped for three consecutive months in 2019, is expected to moderate around the double-digit for the next one year.

This is revealed in the latest Central Bank of Nigeria (CBN) monthly business expectation survey for the month of April.

The Business Expectations Survey for the month of April 2019 was conducted with a sample size of 1050 businesses comprising small, medium and large corporations covering both import- and export-oriented businesses nationwide.

According to the CBN survey, even though inflation is declining, the level is still expected to hover around double digit in the next one year.

Businesses expect inflation to maintain double digits in the next one year and hover around 11.43 and 11.37 percent respectively. However, firms are satisfied with the management of inflation by the Government with a net satisfaction index of 4.7 percent in April 2019.

The consumer price index, which measures inflation has dropped for the third consecutive month to 11.25% in March 2019, according to the monthly inflation report released by the National Bureau of Statistics (NBS).

Nigeria has recorded a double-digit inflation rate far more than it has with single digit inflation eroding much of the purchasing power available to Nigerians.

Also, the survey report shows firms expected borrowing interest rates to rise in the next six months, while the exchange rate is expected to appreciate in coming months.

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According to the survey report, the optimism in the macro economy in April was driven by the opinion of respondents from services, industrial, wholesale/retail trade, and construction sectors.

However, the major drivers of the optimism for next month were services, industrial, wholesale/retail trade and construction.

The expectations of businesses also conform to the latest manufacturing Purchasing Managers’ Index (PMI) which shows that Nigeria’s manufacturing sector expanded for the 25th consecutive months.

On the other hand, the employment outlook index by sector showed that the industrial sector indicates the highest prospects for creating jobs followed by wholesale/retail trade sector, construction sector and services.

Similarly, analysis further shows that expansion plans by sector in the next month showed that the services sector indicates a higher disposition to expansion, followed by the construction sector and the industrial sector.

The surveyed firms identified insufficient power supply, high-interest rate, unfavorable economic climate,  financial problems unclear economic laws, unfavorable political climate, insufficient demand and access to credit as the major factors constraining business activity in April.