Inflation: Good Days May Be Here Soon

By PHC Telegraph

Nigerian officials as well as experts are raising hopes which suggest that the nation’s galloping inflation, a source of growing public concern, may likely slow down.

They are predicting that the strong rally of the naira that is gaining in strength by the day under the able hand of President Bola Tinubu might prove to be the real game changer.

Tinubu may not have succeeded in his quest to attract much needed foreign investors who are reportedly eyeing the Nigerian economy, but on the home turf where it probably matters most, ‘Tinubunomics’ gradually appears to be turning the tide in favour of the naira.

No doubt, the naira is currently running the race of its life, paticularly against the dollar. Most people who are amazed by the Cardoso touch think the naira hasn’t done so badly since the fight to salvage it began.

As at April 14, 2024, 1 USD officially exchanged for 1,201.5 NGN. In the black market, the naira similarly exchanged between 1110NGN and 1200 NGN to one United States dollar.

Reports say the naira has become a strong performing currency globally and there are serious indications that it may further gain in momentum.

Analysts are looking at the current trend in the forex market and the ongoing activities of the Central Bank which is credited with the turnaround that is taking place.

According to figures obtained from various sources, including the CBN, the BDCs and parallel market, the naira appreciated against the dollar after closing last week at N1,150 to the dollar on the parallel market.

It similarly appreciated to gain 7.16%, or N88.23, in the official foreign exchange (FX) trading platform, Legit.com reports.

Thus far, the collaboration between the CBN and the BDCs has been impactful and the further fall of the dollar occurred after the BDC operators directly bought the US dollar at a rate of N1,101/$ from the apex bank.

On Friday, according to one report, the value of the naira increased to N1,150 per dollar on the parallel market for foreign exchange (FX).

This hasn’t translated into lower prices in the Nigerian market or reduced the level of inflation which has reached an all time high.

Bayo Onanuga, a Presidential aide, the other day remarked on X, “Inflation still appears untamed, according to the latest report by NBS. But indications are that it will slow down as the Naira continues to strengthen in the market.”

“NBS reported that in March 2024, the headline inflation rate increased by 1.50% point to 33.20% relative to the February 2024 headline inflation rate which was 31.70%.

“On a year-on-year basis, the headline inflation rate was 11.16% points higher compared to the rate recorded in March 2023, which was 22.04%.”

Onanuga argued that market forces “are yet to reflect the strengthening of the Naira in recent weeks against the dollar.”

Expressing optimism, the Presidential aide predicted that the effect will become even noticeable “as old stocks are replaced with new ones bought with depreciated dollar.”

Statistics indicate the Naira had lost 43% of its value in February, but since staging a comeback, it has steadily joined the league of the “most performing currency among global currencies”, Onanuga wrote.

Appearing confident, Tinubu’s aide added, “Governor Olayemi Cardoso of CBN and his team have their job cut for them to find ways of reining in the inflation. ”

The opportunity will come for the egg heads at the CBN to tell Nigerians what they are doing to flag down inflation when they meet between May 20th and 21st, 2024.

That would be about one week to the celebration of the first anniversary of the Tinubu administration.

 

In the meantime, some Nigerians reckon that bringing down inflation might be a task difficult to achieve.

Those who belong to this school of thought argue that the increase in the cost of fuel as well as the increase in electricity tariffs might act as stumbling blocs in the battle against inflation.

Given the breakthrough in efforts to stabilize the naira, there are Nigerians who believe that Cardoso and members of his team might find answers to the trend that is taking the cost of essential commodities out of the reach of improverished families