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CBN predicts static inflation rate for next six months

THE Central Bank of Nigeria (CBN) has said that the current inflation rate of 11.98 percent would remain static for the next six months.

The apex bank in its Business Expectation Survey (BES) Report for January 2020 explained that inflation level is expected to remain the same in the next six months and increase slightly in the next 12 months.

It also said that the borrowing rate is expected to rise in February, March and the next 12 months.

Business Expectation Survey is a periodical survey, which provides data on the expectations of businesses in both the short and medium terms.

The CBN disclosed that the business survey that revealed the inflation outlook for the next six months has a 97.4 percent response rate from major business sectors all over Nigeria, which covered Industrial, wholesale/retail trade and construction sectors.

The report shows that respondent firms identified insufficient power supply, high-interest rate, unfavorable economic climate, financial problems, unclear economic laws, unfavorable political climate, competition and insufficient demand as major factors constraining business activity.

Further analysis by CBN showed that businesses that are neither import- nor export-oriented, both import- and export-oriented import-oriented, and those that are export-related drove the positive business outlook in January 2020.

According to the report, firms surveyed said they expect the naira to appreciate in February, March and next 12 months, as their confidence indices stood at 26.2, 39.3 and 48.6 index points, respectively

They also expect borrowing rates to rise in February, March and the next 12 months, as the confidence indices stood at 6.0, 3.8 and 4.8 points, respectively.

Meanwhile, they were optimistic that inflation rate in the next six months and the next 12 months to stand at 11.7 and 11.6 percent, respectively

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Respondents anticipate improvements in economic conditions, as the index on economic growth rate in the short run stood at 34.5, 45.1 and 55.6 points for the current month, next six months and next twelve months, respectively

Note: Respondent firms are firms called by CBN to give response/analysis.

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