Some financial experts have said that the downward slide in the nation’s inflation rate could only reflect in prices of food with increased output in agricultural output.
They told The Tide source in Lagos, on Friday while reacting to the May inflation figure that the Federal Government should increase agricultural output to reduce prices of goods and services.
Department of Economics, Olabisi Onabanjo University Ago-Iwoye, Ogun Prof. Sheriffdeen Tella, said efforts must be intensified to increase output in agriculture for both food and cash crops.
He advised the government to check negative activities that affect agricultural output such as the issue of herdsmen and ensure improvement in production as well as capacity utilisation in industries.
He said the decline in inflation had been very slow particularly for food, thereby making the impact to be minimal due to high cost of production and high interest rate.
“For falling prices to be felt in the commodity market, the interest rate must come down and naira must continuously appreciate against the dollar and other key currencies.
“However, interest rate may not come down now because of the fear that once the budget is endorsed by the President for implementation, liquidity will increase in the economy coupled with spending on the forthcoming election.
“So, the Central Bank may want to continue to tighten the monetary angle. What can bring down prices will be increased production in both agriculture and industry,” Tella said.
The Chief Operating Officer, InvestData Ltd., Mr Ambrose Omordion, said the consistent decline of inflation since January 2017 was good for the economy.
Omordion said the impact would be felt with low interest rate and efficient infrastructure that support economic growth and development.
He said government must work hard to improve the nation’s infrastructure to reduce cost of production and aid movement of goods and services.
According to our source, the National Bureau of Statistics (NBS) on June 13 said the Consumer Price Index (CPI), which measures inflation for May, decreased from 13.34 per cent recorded in April to 11.61 per cent (year-on-year).
The NBS disclosed this in its CPI and inflation Report for May released in Abuja.
According to the bureau, this figure is 0.87 per cent points less than the rate recorded in April.
The bureau said the figure showed 16 consecutive reductions in inflation rate since January 2017.
The report stated that increases were recorded in all the Classification of Individual Consumption by Purpose (COICOP) divisions that yielded the headline index.
On a month-on-month basis, the bureau said the Headline Index increased by 1.09 per cent in May, up by 0.26 per cent points from the rate recorded in April.
It stated the percentage change in the average composite CPI for 12 months period ended May over the average of CPI for the previous 12 months period.
It, however, measured the CPI at 14.79 per cent in the period under review, showing 0.41 per cent point lower from 15.20 per cent recorded in April.
The report further showed that the urban inflation eased by 12.08 per cent (year-on-year) in May from 12.89 per cent recorded in April.