CBN expresses concern over higher inflation

Gbola Subair, Abuja - 06.02.2008

The Central Bank of Nigeria (CBN) has expressed concern over the possibility of a higher inflation level in 2008. The CBN governor, Professor Chukwuma Soludo, gave the hint on Tuesday in Abuja after the maiden Monetary Policy Committee meeting for 2008.

Professor Soludo, disclosing the outcome of the meeting, said the committee was satisfied with the improvement in the inflation outcome for 2007 compared with the previous year.

According to him, from 8.5 per cent at end December 2006, the year’s inflation closed at 6.6 per cent at the end of 2007. The decline in inflation in 2007, he said, was as a result of the restrictive stance of monetary policy, complemented by considerable fiscal restraint and favourable climatic conditions for food production in some parts of the country.

Despite the favourable inflation level in 2007, the apex bank has, however, expressed concern that there might be an upsurge in the inflation rate in 2008

The CBN, according to the governor, attributed its concern to the rise in food prices in December 2007 and the overall global and domestic outlook, stressing that everything should be done to ensure that inflation in 2008 was within a single digit.

Another inflation-induced factor, according to Professor Soludo, was the rising growth of money supply in the economy. Over the end of December 2006, level provisional figures indicated that broad money grew by 30.68 per cent in 2007, he said.

Professor Soludo, however, noted that the rapid growth of the money supply did not translate into higher inflation in 2007.