Abuja - The ongoing insecurity in the north east and upcoming general elections are among some factors projected to further drive inflation up.
The projection by Rand Merchant Bank follows inflation accelerating to 8.4 percent year-on-year in February from 8.2 percent in January.
The major price driver was food inflation, rising to 9.4 percent from 8.4 percent.
Although the lower international oil price has a positive effect on the fuel component of the inflation basket, it is outweighed by the continued weakness in the naira as Nigeria’s reliance on imports of raw materials, refined products and consumer goods remains high, RMB stated.
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The economic thinktank said the post-election period and the insecurity challenges could accelerate inflation.
“Retracting 50 percent of the remaining fuel subsidy, post elections, would exaggerate the effect on goods inflation, resulting in higher real wage demands to counter the negative wealth effect. Higher import prices, bottlenecks in food supply due to security challenges in the north, and excess liquidity in the banking system all pose palpable threats to inflation.”
Elections are due at the end of the month and mid-April.
The terror Boko Haram is waging in the north east, which has claimed thousands of lives over the years, has marred the run-up to the polls.
- CAJ News