The Central Bank of Nigeria (CBN) survey for fourth quarter
of 2020 (Q4 2020) showed that rising inflation will make the country’s economy
weaker in 2021.
This was contained in CBN’s statistics department report on
‘Inflation Attitudes Survey for Q4 2020’ released on Monday.
According to the survey report, majority of respondents
(60.8 percent) believed that Nigeria’s economy would end up weaker in the next
12 months if prices started to rise faster.
CBN said the responses is consistent with the notion that inflation constrains economic growth.
Also, a majority (66.7 percent) of the respondents expected
prices to increase by at least 3 percent over the next 12 months, while only
15.1 percent respondents were optimistic that prices would either go down or
remain the same.
In the report, most respondents, given a trade-off, would
prefer higher interest rates to higher inflation.
In another CBN’s statistics department report on ‘consumer
expectations survey for Q4 2020’ released on Monday, most respondents expect
prices of goods and services to rise in the next 12 months.
“The major drivers are: savings, food and other household
needs, education, purchase of appliances/ durables, purchase of car/motor
vehicle, and purchase of houses,” the report read.
Also, consumers expect borrowing rate to rise and
anticipates that the naira would appreciate by the next 12 months, while
consumers expect unemployment rate to rise by 2021.
Meanwhile, consumers’ overall confidence outlook in this
quarter (Q4 2020) was pessimistic.
“Respondents attributed this unfavourable outlook to
declining economic conditions, family financial situation and declining family
income.”
However, consumers’ overall confidence outlook for first
quarter of 2021 (Q1 2021) and next 12 months was optimistic.
CBN said: “This positive outlook could be attributed to the
expected increase in net household income, an anticipated improvement in
Nigeria’s economic conditions and expectations to save a bit and/or have plenty
over savings in the next quarter and the next 12 months.”
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