CBN survey among Nigerians establishes correlation between rising inflation and weak economy

There is a prevailing negative sentiment among Nigerians that inflationary pressure will foster on the nation a weaker economy.

This is the result of a survey conducted by the Central Bank of Nigeria.

The statistics department of the CBN disclosed this in its ‘Q2 2020 Inflation Attitudes Survey Report’.

The CBN said the survey was conducted from May 18 to 27, 2020, with a sample size of 2,070 households randomly selected from 207 enumeration areas across the country and a response rate of 97.9 per cent.

The report said, “Respondents believe that the economy would end up weaker if prices start to rise faster than they do now.

“Given a trade-off between inflation and interest rates, more respondents prefer interest rates to fall than inflation rate. Majority of the respondents have no idea as to who influences the direction of interest rates in Nigeria.”

When respondents were asked what would become of the economy if prices started to rise faster, the survey result showed that 57 per cent of the respondents believed that the economy would end up weaker.

It added that 4.9 per cent of the respondents stated that it would be stronger, 14.2 per cent believed it would make a little difference, while 23.9 per cent did not know.

The responses showed considerable support for price stability, as majority (57 per cent) agreed that the economy would end up weaker.

This was consistent with the notion that inflation constrained economic growth.

When asked how prices had changed over the past 12 months, respondents gave a median answer of 5.1 per cent.

Of the total respondents, 3.3 per cent thought prices had gone down or not changed, 71.5 per cent felt that prices had risen by at least 3.0 per cent, while 22.3 per cent felt that prices inched up by more than 1.0 per cent, but less than 3.0 per cent.

Those that had no idea were 2.9 per cent.

The median expectation of price changes over the next 12 months was that prices would inch up by 3.7 per cent.

From the total responses, 57 per cent of the respondents expected prices to rise by at least 3.0 per cent over the next 12 months, while 25 per cent expected prices to increase by more than one per cent, but less than three per cent.