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Nigeria’s inflation figures dropped for the third consecutive
month in November to 12.8 per cent.

According to data from the National Bureau of Statistics,
released on Tuesday, this is significantly lower than 13.4 percent recorded in
October and 13.6 per cent in September. This is coming on the back of
suggestions by the International Monetary Fund (IMF) that emerging markets will
need to guard against rising inflation, surging capital inflows and the
associated risk of bubbles in asset and credit markets and the threat of rapid
currency appreciation.

According to the Bretton Woods institution, “In coming years,
emerging market economies will face challenges very different from those of the
advanced economies.”

Food prices rise

The statistics office, in its report for November, stated that
average monthly food prices rose marginally by 0.3 percent in November 2010
when compared with October. “The level of the Composite Food Index was higher
than the corresponding level a year ago by 14.4 percent, meaning that the
average price of foodstuff has risen by that margin in the last one year.”

It however observed a near price stability with some non food
items. The highest food price increase were recorded in Delta and Ebonyi States
at 118.6 per cent and 118.3 per cent in that order, while the least increase
were recorded in Ekiti and Benue with 108.8 per cent.

Regional Head of Research, Africa, Standard Chartered, Razia
Khan, suggested a tightening of monetary policy to ensure continued foreign
exchange rate as well as price stability. The naira currently trades for
N149.06 to the dollar. “Foreign exchange reserves may remain under pressure,
and offsetting policy will be required from the authorities to ensure price
stability,” she said in her assessment of the N4.2 trillion 2011 budget presented
yesterday by President Goodluck Jonathan.

IMF statistics

According to the IMF, emerging economies having ridden out the
negative impact of the global financial crisis better than the developed
economies should be less concerned about weak growth and deflation.

According to the latest edition of Finance & Development
Magazine, an IMF publication, there was variation among regions, however.
“Emerging Asia saw the most favourable outcomes, with modest declines in
growth. The emerging economies of the Middle East and North Africa (MENA) and
those in sub-Saharan Africa also enjoyed only small declines in output,
possibly due to their modest exposure to trade and financial flows from the
advanced economies.”

Nigeria is the second largest economy in sub Saharan Africa
after South Africa.The report hinged the success of these countries on a
combination of factors, including macroeconomic policies that brought inflation
under control and limited public debt; reduced dependence on foreign financing;
current account surpluses that insured against reversals of capital inflows;
and diversification in production and exports. “Improved trade and financial
linkages increased resilience, and rising incomes and a burgeoning middle class
translated into growing domestic markets for emerging market economies,” the
report said.