The Consumer Price Index (CPI), which is used to gauge inflation in Nigeria, increased significantly by 92 per cent in 2016, from 9.62 per cent in January, to 18.48 per cent in November.
This clearly showed that inflationary pressure was strong in 2016 as prices of goods and service rose astronomically during the year. Inflation in 2016 rose far above the upper boundary that was set by the central bank.
Although the CPI figures for December would be released next month, it is largely expected to remain within the 18 per cent band.
From 9.62 per cent in January, the CPI climbed to 11.38 per cent February, 12.77 per cent in March and 13.77 per cent in April. Furthermore, it jumped to 15.58 per cent in May, 16.48 per cent in June, 17.13 per cent in July and 17.61 per cent in August. In addition, the CPI edged higher to 17.85 in September, 18.33 per cent in October and 18.48 per cent in November. In all, the CPI rose by 92 per cent in 2016.
The federal government recently said it was targeting a growth rate of seven per cent between 2017 and 2020, through its National Economic Recovery Growth Plan (NERGP). This is expected to result to a drop in the CPI in the coming year.
The Minister of Budget and National Planning, Senator Udo Udoma said the need for the plan and its effective implementation was more imperative, given the current state of the nation’s economy. The minister stated that every effort must be made to ensure that the new plan eventually did not suffer the fate of those before it. To ensure that the NERGP does not go the way of others, he stated that the government was putting in place a delivery unit that would drive its implementation through effective monitoring and evaluation.
Udoma explained that the plan was structured in such a way that it would be the basis for all subsequent budgets, which was why the contribution and support of the National Assembly was very critical to ensure the effective realisation of its objectives.
The Director General of the West African Institute for Financial and Economic Management, Prof. Akpan Ekpo, recently told THISDAY that there was need for government to embark on structural economic reform to tackle some of the challenges facing the economy.
“Our economy only consumes, we do not produce anything that brings foreign exchange. So, what you do is that you direct policies that would encourage people to encourage and manufacture, no matter how little, something that would add value, before you export. What we need now are structural policies. What we have seen is that the central bank has been doing a lot of what it ought not to be doing. The central bank is pushing out a lot of intervention funds. A lot of times, their intervention funds have fiscal coloration. And that is not supposed to be their business.
“So for me, recessions are recurrent in the market system. It comes and goes, but it gives you an opportunity to make sure that you manage the economy properly. No two recessions are alike. Also, they need experts to help them manage the economy. It is not a tea party.
“They need technocrats to advise them. And in our system, no government has a long-run luxury. Every government has four years, so they have to move fast. My worry for Nigeria is more than the economic recession. Let me ask you as question. If for example, the next quarter Gross Domestic Product (GDP) growth becomes positive marginally, that means the economy may be out of recession. But has the problem of unemployment been solved? Has that solved the problem of inflation? Has that solved the poverty problem? It has not! So, we need to carry out long-term structural reforms and be serious about what we are doing,” Ekpo stressed.