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Inflation projected to accelerate in the long term

17 April 2015, 11:19Okoro Chinedu

Lagos - Analysts projected average inflation to increase in the long term owing to a combination of factors including the insecurity in the northern parts of the country.

The projections follow the release of statistics indicating headline inflation accelerated to 8,5 percent year-on-year in March from 8,4 percent in the previous month.

The major price driver was food inflation, rising by 9,4 percent.

Market watchers forecast the inflation figure to accelerate.

“Other inflationary pressures remain -higher import prices, bottlenecks in food supply due to security challenges in the North, and excess liquidity in the banking system,” stated Rand Merchant Bank Global Markets on Friday.

Also Read: Polls, Boko Haram seen worsening inflation

The international think-tank said in addition, revoking 50 percent of the remaining fuel subsidy would exaggerate the effect on goods inflation, resulting in higher real wage demands to counter the negative wealth effect.

As such, it forecast inflation to average 8,6 percent and 8,9 percent in
2015 and 2016 respectively.

An analyst told CAJ News the slower pace in the acceleration of inflation was indicative of the Naira trading steadily at 199 against the United States Dollar in March.

“However, the effects of the previous sharp dip in the local currency will continue to filter through over the next few months,” he said.

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

- CAJ News

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