The Centre for the Study of Economies of Africa (CSEA), a research firm committed to analytical researches on Africa’s economic trends, has advised the Central Bank of Nigeria (CBN) to consider reviewing the Monetary Policy Rate (MPR) as a desirable monetary option to thawing Nigeria’s rising Inflation rates.
Specifically, the CSEA researchers pointed out that the CBN can increase the Monetary Policy Rate (MPR) which should reflect in the interest rates offered by commercial banks and decrease bond prices to reduce the money supply and address the persistent rise in prices.
The researchers, while giving this advice in its latest Nigeria Economic Update Issue No 25 report published on June 18, 2021 sourced at the weekend by our correspondent, noted that inflation rate fell to 17.93 percent in May 2021, 0.19 percent lower than the 18.12 percent recorded in the preceding month.
The experts added that the decrease was driven by the food component of inflation which fell to 22.28 percent from 22.72 percent in the preceding month
The researchers further noted that with the decrease of the nation’s inflation rate for the second consecutive month in May driven largely by the declining trend in food items’ prices, the potential remained high that the decrease in the food commodity prices could be sustained in the months ahead if the security in the food-producing regions could be further sustained.
According to the CSEA economists, improved security will help in further reducing the prices of food, the main driver of the recent surges in the general price level, and by so doing encourage more farmers to cultivate food crops sustainably.
The report stated: “The decrease was driven by the food component of inflation which fell to 22.28 percent from 22.72 percent in the preceding month. By contrast, core component of inflation increased by 0.41 percent to 13.15 percent in the review period. The marginal decrease in food inflation could be linked to improved security in food-producing regions in the past weeks.
“On the basis of improved security, the prices of food could continue to fall leading to a decline in overall inflation. The Central Bank of Nigeria can increase the Monetary Policy Rate (MPR) which should reflect in the interest rates offered by commercial banks and decrease bond prices to reduce the money supply and address the persistent rise in prices”, the research firm maintained.