The Central Bank of Nigeria has said the country’s inflation, which has galloped to 12 per cent, will fall to a single-digit by the end of the year.

"As we enter harvest period, we expect prices of foodstuffs to crash because of the favourable weather we are experiencing," the Deputy Governor, Financial Sector Surveillance, CBN, Mr. Tunde Lemo, said on the sidelines during a conference in Abuja on Tuesday.

"This will help in reducing the inflation rate because rising food prices is a major component of the current high rate of inflation," he added.

Nigeria’s inflation, buoyed by rising food prices and excess liquidity hit double-digit in June at 12 per cent, up from 9.7 per cent in May, defying government’s earlier plans to keep it at single-digit.

"Inflation is a general problem the world financial markets are battling with and Nigeria is not an exception," Lemo explained.

He said the country’s core inflation rate was still at single-digit, stressing that the favourable weather would boost agricultural yield and pull down inflation.

Fears over rising inflation compelled the CBN to maintain its lending rate benchmark at 10.25 per cent after raising it for the third time this year.

The bank said tightening the monetary policy by raising the Monetary Policy Rate (lending rates benchmark) was one way of taming inflations but local manufacturers criticised the move saying "it is a disincentive."

"If on the government side, the government is already pumping money by as high as 15 per cent, the implication is that the private sector must be constrained not to spend more than the remaining five per cent, though it is much more complicated than this," the CBN had said.

According to the bank, once lending (interest) rates go up, it will reduce the propensity of the private sector to want to borrow, which in the long-run, will reduce the amount of money in the system and tame inflation.

"Once the MPR is adjusted upwards, it is a signal to the banking sector and the private sector that money is going to be a little tighter to get. That means we have to increase lending rate, which is same as interest rate in order to slow down credit creation in the system," the bank had said.

Lemo, however, said the CBN would continue to ensure transparency in the financial sector but would not control lending rates.