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Higher inflation will weaken Nigerian economy further –CBN survey

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NBS says inflation rate jumped to 11.44% in December

The Nigerian economy will be much weaker if the prices of goods and services, or cost of living, keep rising, data from the Central Bank of Nigeria (CBN)’s Inflation Attitudes Survey Report for the fourth quarter showed on Monday.

60.8 per cent of the respondents in the CBN survey, which detailed the views of Nigerian households on changes in in prices of goods and services in the past 12 months and their expectations of price changes in the next 12 months, were pessimistic that the economy would become weaker.

On the contrary, 8.4 per cent of respondents believed it would come out stronger while 12.8 per cent said it would make a little difference. The rest 17.9 per cent said they did not know what would become of the economy if prices began to faster than do now.

Inflation in Africa’s biggest economy rose for the 15th straight month in November, touching its peak of 14.89 per cent in 31 months on account of government’s policy of land border closure that has kept food prices high and weakened disposable income.

second consecutive quarterly contraction in the gross domestic product in the third quarter recently plunged the economy into a recession, the second time in four years.

Read also: Nigeria’s inflation hits 14.89%, driven by soaring food prices

More respondents preferred interest rates to decline than for inflation rate to fall, according to the survey.

“Respondents were asked whether it would be best for the Nigerian economy if interest rates rise or fall.

“The results showed that 46.7 per cent indicated that it would be best for the Nigerian economy if interest rates fell, while 7.1 per cent opted for higher interest rates.

“Those that thought that it would make no difference accounted for 10.8 per cent, while 35.3 per cent had no idea.”

More than half of the respondents believed that interest rate increase would make inflation rise slowly in the short term. 45.2 per cent agreed a rise in interest rates would trigger a slow increase in inflation in the medium term.

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