Inflation rate, which has been slowing down, may reverse in the second half of 2018, as a result of increased liquidity in the system from political spending, Managing Director, Cowry Asset Management Limited, Johnson Chukwu, has said.
Speaking in an exclusive interview with The Point, Chukwu said the continuous decelerating inflation rate in the country was largely due to weak purchasing power of most Nigerians, adding that the economic growth would be stalled in the second half of the year, as the government would make frantic efforts to put an end to the insecurity problem.
“Declining inflation in Nigeria could be as a result of low consumer spending, occasioned by weak disposable income. An average salary earner in Nigeria has suffered a loss of 43.46 per cent in the purchasing power of his/her income in the past three years,” he said.
Chukwu noted that the disposable income of Nigerians has dipped significantly, owing to devaluation of the naira and the country’s slow economy growth, adding that as a result of low consumer spending among Nigerians, manufacturers were compelled to cut the prices of their goods.
According to him, if there is no salary increase, standard of living in the country will continue to deteriorate.
The Cowry Asset Management boss reasoned that though Nigeria’s economy was not contracting, it was, however, growing at a pace below its population growth rate, which posed a huge challenge.
While making projections for the second half of 2018, Chukwu said the stock market would likely remain bearish for the rest of the year due to capital flight, which would mount more pressure on the country’s foreign exchange market and cause the spread between the official window and the black market.
“The poor performance of the Nigerian equities market was a reflection of the state of the economy. If Nigeria is able to get the right environment, the country’s economy will be growing naturally around seven to eight per cent. We have not evolved an appropriate framework that will ensure sustainable economic growth,” he
said.
Chukwu argued that the Federal Government’s plan to release N5, 000 to poor Nigerians from the recovered $322 million Abacha loot, was not in the best interest of the country, explaining that handout would not end
hunger.
