Inflation defiles natural laws, may surge to 22.67% April on supply chain disruptions – Rewane

Inflation in Nigeria has consistently defiled Newton’ law of gravity that says everything thing that goes up must come down, as it is poised to hit a fresh 17-year high of 22.67 per cent in April, Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company (FDC) Limited has said in its latest publication.
According to Rewane, the inflation has refused to yield to natural laws by rising for the fourth consecutive time.
He said most central banks have been tightening noose in order to tame the rising monster.
Although inflation in other developed economies are responding to stimuli, that of Nigeria has defiled moves to tame it.
The FDC report said. the Consumer Price Index (CPI) report for the month of April will be released on May 15.
“Based on our survey of major commodities markets in Lagos Metropolis and econometric model, headline inflation is estimated to increase again in April by 0.63 per cent to 22.67 per cent from 22.04 per cent in March. Similarly, Month-on-month inflation is projected to inch up 0.42 per cent to 2.29 per cent in April from 1.87 per cent in March”, it said.
Consumer price inflation has increased sharply since the Russia-Ukraine war in February 2022, disrupting energy and commodity prices. The major inflation culprit this time will be the planting season, which is reducing commodity supply. This is being compounded by a boost in aggregate demand (Easter and Ramadan celebrations) and an increase in liquidity (re-introduction of old Naira notes). Food inflation is expected to spike by 0.17 to 24.62 per cent from 24.45 per cent in March.
Analysts and market players have warned of impending doom with the recent approval of N22,72 trillion Ways and Means ( W&M) loan from the Central Bank of Nigeria (CBN).
analysts say the move is capable of not only making the naira weak, but will impose galloping inflation. According to them. in more practical terms, it means printing of money to run a government.
The Senate however complied and approved the conversion to a 40-year bond of the N23.72 trillion Federal Government’s unappropriated expenditure funded by the Central Bank of Nigeria (CBN) through its Ways and Means Window.
The implication is that the debt will take 40 years to be repaid by another generation to come.
Part of their fears is premised on the fact that Nigeria has already crossed the sacred burrowing limit pf five per cent of previous revenue allowed by law.
And the fears are about violation of the CBN Act and the alarming growth. 
According to Section 38 of the CBN Act, “the Central Bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate as the Bank may determine”.
But the issue is that, “the total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government. All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid”.
Chuks Umegbu, a former banker told Blueprint that when government resort to this method of raising over draft or loan, it then means that the level of productivity is at lowest ebb.
He reflects that, crude oil, the country’s main source of revenue is at its lowest state, with Nigeria being unable to meet its quota for some time. Umegbu regrets that, Nigeria could not even make good money when crude oil prices were high at the International  market.
Dele Ajayi, a stockbroker is afraid that, the inflation would not only gallop, but could reach a level where the local currency will become like a mere paper. with little or no value. 
Ajayi who spoke with Blueprint, said the signs are already in sight. According to him, from the prices of food stuffs to electronics and  building materials, it does appear the money we take to the market has no weight. 
“These days, N10,000 can hardly make a pot of soup. and in most cases, a plate of normal food is now N1,500 and above instead of the usual between N300 and N500”, he said.
He is afraid that if the incoming government does not diversify the economy, reduce

Leave a Reply

Your email address will not be published. Required fields are marked *