Headline inflation rate dropped for the eighth consecutive time in a sustained ease that has seen improvement in average living costs over the past eight months.
The National Bureau of Statistics (NBS) yesterday released its Consumer Price Index (CPI) Report indicating that composite inflation rate dropped by 160 basis points to 14.45 per cent in November, as against 16.05 per cent in October.
It was the 8th time the rate eased consecutively since April.
The NBS attributed the latest decrease in inflation to the reduction in the prices of food, gas and transportation.
A breakdown of the NBS report showed that food inflation moderated by 204 basis points to 11.08 per cent in November as against 13.12 per cent in October.
Core inflation-all items excluding farm produce and energy, improved by 65 basis points to 18.04 per cent in November, from 18.69 per cent in previous month.
Finance and economic experts said the sustained disinflation trend would impact positively on people’s disposable incomes and resilience.
Managing Director, Highcap Securities, Mr David Adonri explained that as rising inflation erodes the purchasing power of money and constricts disposable income, declining inflation rate reverses the process.
He said: ‘With lesser drain from consumption, disposable income increases, paving way for higher savings and investment. The reward for investment also increases as corporate profits rise due to general cost reduction and also fall in interest rate. However, the return on fixed income investment reduces as yields fall’.
Managing Director, GTI Capital, Mr Kehinde Hassan said continuing decline in inflation has a lot of positive multipliers for the economy.
He noted that while there could be a spike here and there along the curve, the sustained trend over the past months showed that Nigeria has gotten a steady grip on price fluctuation, providing a stable and better basis for planning.
He urged the government to be nimble and reflective in its policy decisions such that while the themes of the reforms remain unchanged, policy decisions take into consideration emerging data.
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf had called for a combination of monetary, fiscal, and structural policies to consolidate the gains of disinflation and ensure real welfare benefits for citizens.
He said: ‘The way to convert the disinflation trend into a general gain is to focus on the prices of basic items and basic needs. If you look at the composition of the inflation drivers, even within the context of disinflation, the major drivers are things like food, energy, transport, education, and health. Those are the major drivers of inflation even within the context of disinflation.
‘So, what one would like to see for the effect to be a lot more pronounced is for the prices of these basic things to come down even further, talking about prices of food items, energy prices, cost of transportation, cost of education, cost of pharmaceutical products, and cost of health. These are the things ordinary people spend most of their income on. We need to see more deliberate policy intervention, particularly within the fiscal policy, to drive down some of those costs, so that the impact will be greater.
According to him, government could engage in indirect subsidization of some of the basic utilities by deploying more government-owned transport vehicles and investments in mass transits and agricultural inputs.
‘This is not only a federal government issue, the state governments have very big roles to play, as well as the local governments. They should be able to provide transportation at a highly discounted cost to the citizens, they should subsidize agriculture more so that the cost of food can come down significantly and by same effect, food prices. They need to continue to subsidize education and health. That is the way we can have welfare gains for the citizens in addition to the macroeconomic gains. That’s the kind of policy mix that we should begin to deliver in order to ensure the benefits of this disinflation go down to the people,’ Yusuf said.