CBN survey shows more Nigerians vote for price stability as they see weaker economy on rising inflation  

A survey carried out by the Central Bank of Nigeria’s (CBN’s) Statistics Department in the fourth quarter of 2018 has indicated that more Nigerians were skeptical about the country’s economic prospect due to rising inflation.

The survey, which was on inflation attitudes was conducted between November 24 and December 7, 2018 from a sample size of 1,770 households, randomly selected from 207 enumeration areas across the country, with a response rate of 99.2 percent.

According to the survey report, respondents were asked what would become of the Nigerian economy if prices started to rise faster than they do now with the survey result showing that 44 percent of the respondents believed that the economy would end up weaker. On the other hand, 14.2 percent stated that it would be stronger, 18.3 percent believed it would make a little difference, while 22.8 percent indicated they did not know.

The report, from the responses, opined that more Nigerians have considerable support for price stability, as majority (44 percent) agreed that the economy would end up weaker.

The CBN said said the results were 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 3.8 percent.

Of the total respondents, 23.9 percent thought prices had gone down or not changed, 53.7 percent felt that prices had risen by at least three per cent, while 17 percent felt that prices inched up by more than one percent, but less than three percent. Those that had no idea were 5.3 percent.

“The median expectation of price changes over the next 12 months was that prices will inch up by 2.3 percent. From the total responses, 48.2 percent of the respondents expected prices to rise by at least three percent over the next 12 months, 14.3 percent expected prices to increase by more than one percent, but less than three percent.

“However, 30.9 percent of the respondents were optimistic that prices over the next 12 months will either go down or remain the same,” the report read in parts.

On interest rates, the survey report stated that the percentage of respondent households that felt that interest rates had risen in the last 12 months declined by 0.7 points to 28.6 points in the current quarter when compared to 29.3 points attained in Q3, 2018.

On the other hand, nine per cent of respondents believed that interest rates had fallen, 16.8 per cent of the respondents were of the opinion that the rates stayed about the same in the last 12 months, while 45.6 percent of the households had no idea.

The result revealed that more households had no idea on the direction of interest rate in the past 12 months. On the expected change in interest rates on bank loans and savings over the next 12 months, some respondents (23%) were of the view that the rates would rise, while 17.4 percent believed that the rates would fall.

However, more respondents (59.6%) of the respondents either expected no change or had no idea. Furthermore, respondents were asked whether it would be best for the Nigerian economy if interest rates increased or decreased. The results showed that 33 percent indicated that it would be best for the Nigerian economy if interest rates fell, while 11.1 percent opted for higher interest rates.

Those that thought that it would make no difference accounted for 12.7 percent, while 40.2 percent had no idea. The responses revealed that while many of the respondents favoured lower interest rates for the Nigerian economy, many more had no idea whether it should rise or fall.

On interest rate-inflation nexus, the report showed that 35.2 percent thought a rise in interest rates would make prices in the street rise slowly in the short term, as against 11.5 percent that disagreed. In the medium term, 33.6 percent agreed that a rise in interest rates would make prices in the street rise slowly, 12.8 percent disagreed.

Respondents were asked to choose between raising interest rates in order to keep inflation down and keeping interest rates down to allow prices to rise. Responding, 21.5 percent preferred interest rates to rise in order to keep inflation down compared to 25.4 percent that said they would prefer prices to rise faster, while 50.9 percent had no idea.

“These responses suggest that given a trade-off, more of the respondents will prefer higher interest rates to higher inflation, which is suggestive of the respondent households’ support for the bank’s price stability objective,” the report added.