Inflation at 15.63% on the back of growth in assets
By Jeph Ajobaju, Chief Copy Editor
Money supply (M3) rose to 13.77 per cent in December 2021 against 10.10 per cent in November, and inflation grew to 15.63 per cent from 15.40 per cent, according to the Central Bank of Nigeria (CBN).
After seven months of decline, inflation grew in December, confirming the monetary theory that increase in money supply stokes inflation.
The CBN disclosed the figures in the latest communique of its Monetary Policy Committee (MPC) meeting.
Broad money (M3) is the amount of money in circulation in an economy, and is regarded as the most comprehensive method of determining money supply.
Broad money includes both narrow money and other assets that may be quickly turned into cash to acquire goods and services.
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Growth in assets
“Reviewing the developments in monetary aggregates, the Committee noted that broad money supply (M3) rose further to 13.77 per cent in December 2021, compared with 10.10 per cent in November 2021,” the CBN said.
The CBN linked the surge in money supply to growth in assets, a fundamental component in money supply, as reported by Nairametrics.
“This upthrust was largely driven by the growth in Net Domestic Assets (NDA) of 15.58 per cent in December 2021, compared with 9.40 per cent in November 2021.
“The sharp growth in Net Domestic Assets (NDA) was largely attributed to an increase in claims on the Federal Government and other sectors.
“The slowdown in growth of Net Foreign Assets (NFA) resulted from a decrease in foreign assets holdings of the banking system in favour of more domestic investments.”
Net Foreign Assets (NFA) decreased to 6.06 per cent in December 2021, compared with 14.98 per cent in November.
