An economist, Dr Aminu Usman, has predicted stability in inflation following the new Foreign Exchange (FOREX) policy recently introduced by the Central Bank of Nigeria (CBN).
Usman, a lecturer at the Department of Economics, Kaduna State University made the prediction in Abuja on Monday in an interview with the News Agency of Nigeria (NAN).
He said that the Consumer Price Index (CPI) which measured inflation might not change significantly due to the new FOREX policy because market had generally adjusted to the parallel market rates.
NAN reports that the Central Bank of Nigeria (CBN) on June 15 unveiled new guidelines in the management of FOREX, which will be determined by the market and primary dealers.
The new guideline is part of the CBN’s mandate to foster depth, stability and liquidity in the `forex’ market.
Meanwhile, NAN reports that CPI increased to 15.6 per cent year-on-year in May following a 13.7 per cent rise in the previous month, according to the National Bureau of Statistics.
It was the highest reading in more than six years as cost of food, housing, utilities and transport surged mostly due to 67 per cent increase in the price of petrol.
Also, there were highest increases in the passenger transport by road, liquid fuel (kerosene), lubricants for personal transport equipment and vehicle spare part.
Usman said that the CPI indicated the level of decline in the economy and the government inability to ease the closure of the country’s border to enable food imports.
“Rising food prices contribute a lot to the spiraling inflation.
“There is also this problem of late rains in the North fuelling speculation of food shortages later in the year.
“And you know most manufacturers have adjusted their prices to parallel market exchange rates.
“Market players have been expecting it to come but the government only delays it at huge cost to the economy, “ he said.
He, however, advised the Federal Government to focus on domesticating the production of those items on its prohibition list to ease up shortages that contributed to price inflation.
In addition, he said that the government should open borders to allow good imports, pending improved local production in the country. (NAN)