Nigerians have indicated that they prefer interest rates to fall, while the inflation rate rises if given the chance to choose between inflation and interest rates.
This was contained in the Central Bank of Nigeria (CBN) Inflation Attitude Survey (IAS) report for the third quarter of 2018. The survey was conducted a few weeks ago from a sample size of 1,770 Households randomly selected from 207 Enumeration Areas (EAs) across the country, with a response rate of 96.9 per cent.
Inflation – Nigerians Support Price Stability
According to the CBN report, 48.4% of the respondents believed that the Nigerian economy would end up weaker if prices start rising faster than they do now while 12.1% stated that it would be stronger. Also, 17.7% of the respondents believed it would make a little difference in the economy. The survey shows more Nigerians are in support of price stability, as almost half (48.4%) of the respondents believed that the economy will end up weaker if prices begin rising faster than they are doing now.
Similarly, More Nigerians believe that prices have risen in the last one year when asked how prices have changed over the past one year, as 56.5% of total respondents believed prices have risen by at least 3.0%. Also, out of the total respondents, 23.4% were of the opinion that prices have since gone down in the past 12 months while 13.5% felt prices had moved up by more than 1% but not up to 3%.
Meanwhile, when asked whether prices will change in the next 12 months, the majority of respondents (40.8%) were sure prices would still increase by at least 3% while 36.9% expected prices to either drop or remain constant in the next one year. Also, 12.5% of them believed prices would definitely rise more than 1%, but not up to 3%.
Economy Will Grow, If Interest Rates Fall
Also, 23.5% of the respondents expected the interest rates on bank loans and savings to rise in the next one year while 14.6% thought the interest rates would fall during the period and 61.8% had no idea whether interest rate would rise or fall.
Meanwhile, when asked whether it would be best for the economy if interest rates rise or drop, 34.4% were of the opinion that it would be best if the interest rates could fall while 15.6% were of the view that interest rates must rise, for the economy to grow. The report survey shows 11.1% of the respondents believed there would be no difference in the economy.
Interest Rate – Inflation Tradeoff
Responses from the survey showed more Nigerians prefers higher interest rates to higher inflation. When asked to choose between raising the interest rates up in order to keep down inflation and raising inflation in order to keep interest rates down, 23.9% preferred interest rates to rise for inflation to go down. Also, 28.2% wanted prices to rise for interest rates to drop.
Inflation Rate is Rising Gradually
After eighteenth consecutive months of disinflation, since January 2017, head on inflation increased by 11.23% year-on-year in August 2018; which is 0.09% higher than the recorded rate in July 2018 (11.14%). The rise in inflation continued in September when it increased by 11.28% year-on-year, which is 0.05% higher than the recorded rate in August 2018 (11.23%).
Core inflation stood at 9.8% and decreased by 0.2% in the month of September from the 10.00% recorded in August while Composite Food Index rose by 13.31%, during the same period, compared to 13.16% in August 2018.