By Tony Obiechina, Abuja
Economic Expert, Professor Uche Uwaleke has said that the marginal drop in inflation as reported by the National Bureau of Statistics (NBS) does not translate to a sustainable downward trend in inflation rate.
Uwaleke spoke against the backdrop of the NBS Report on Friday which stated in its “Consumer Prixe Index(CPI), June 2021that inflation rate reduced by 0.18 per cent to 17.75 per cent in June from the 17.93 per cent recorded in May.
Reacting to the development in a statement on Friday the Capital market Professor said, “it is difficult to interpret this marginal drop in headline inflation since April this year to mean a sustainable downward trend in inflation rate.
“This is because the risks to inflation outlook are still present. These include insecurity which directly impacts food inflation, the recent devaluation of the naira and the likely hike in pump price of fuel and electricity tariffs.
“It is also possible the marginal drop in food inflation to 21.83% in June may not reflect actual drop in basic food prices but arising from the ‘base effect’ associated with the methodology of computing CPI on a year on year basis.
“To appreciate the practical reality, one needs to consider price changes based on month-on-month”, he added.
According to NBS, Headline inflation increased by 1.06% in June from 1.01% recorded in May month-on-month.
Continuing, Uwaleke who is a lecturer at the Nasarawa State University, Keffi, said, “is pertinent to note that Inflationary pressure is coming more from the food component at over 20% reflecting legacy factors such as inadequate supply and transport challenges. This partly explains why food inflation is highest in Kogi and lowest In neighbouring FCT.
“Given that inflationary pressure has to do more with supply, I suggest the government and the CBN should scale up interventions in Agriculture with adequate monitoring and evaluation mechanisms put in place.
“The CBN should equally continue to ensure forex market liquidity to reduce exchange rate especially now that crude oil prices are relatively high.
“In order to increase food output, the need to tackle the seemingly intractable security challenge facing the country cannot be overemphasized”, he added.
