Minister of Finance, Zainab Ahmed, has said the closure of the
countryโs land borders is contributing to rising inflation.
Last week, the Nigeria Bureau of Statistics (NBS) released figures
that showed that the consumer price index, which measures inflation,
rose to 11.61% in October, an increase of 0.36 percentage points
compared to 11.24% recorded in September.
That was the exact inflation rate recorded in May 2018 when the
country was recovering from the recession and high inflation rate.
At the end of the federal executive council meeting on Wednesday,
Ahmed told state house correspondents that inflation rose due to hikes
in food prices arising from border closure.
โOn inflation, headline inflation declined every month for several
months before we noticed an optic in the last two months. And now
headline inflation is at about 11:61 percent as at the end of October.
The slight increase in this inflation between September and October is
due to food inflation,โ she said.
โThe food inflation we are ascribing to prices of cereals, rice and
fish. And part of the reason is the border closure but the border
closure is very very short and temporary and the increase is just
about two basis point. Remember there was a time inflation was nine
percent and it grew to about 18 percent in January 2017 when we were
in recession.
โThe relationship between inflation, interest rates and growth is
managed by the monetary authorities and is a management that is
tracked on a regular basis.
โSo if you reduce interest rate you expect more borrowing for
investments in the real sector. But at the same time that also has the
tendency of reducing money that is used for consumption on a day to
day basis.
So itโs a balance that we continue to watch on a regular basis, we
expect that this will be moderated as border closure impact fizzles
out and also as the monetary authorities continue to support the MPR
rate therefore ensuring that interest rates are not on the high side.โ
Ahmed added that closure of the border is temporary, highlighting the
benefits of closing the borders.
โI need to remind us that the border closure is temporary. We have
really advanced in our discussions between ourselves and our
neigbours. We expect that the outcomes of those discussions and
agreements is that each party will respect the protocols that we all
committed to and then the borders will be open again,โ she said.
