The Center for Promotion of Private Enterprise (CPPE) has lamented the plunging purchasing power of Nigerians as inflation continues to escalate in the country.
Chief Executive of CPPE, Dr Muda Yusuf commenting on the latest inflation data released by the National Bureau of Statistics (NBS) noted that the surging prices in the country is being further escalated by the increase in petrol prices.
Inflation according to NBS data has risen to 32.7 per cent in September from 32.15 per cent in August, after a two month decline. Yusuf, in a statement noted that the resurgence of high inflationary pressure is troubling despite policy measures to tame inflation, especially on the monetary side.
“Purchasing power has continued to plunge over the past few months. The situation had been further exacerbated by the surging petrol price.
After a few months of deceleration, the inflation numbers had returned to a spiralling path. The reality is that the dynamics driving inflation are yet to be effectively subdued.”
He noted that the factors inducing the rising inflation include the depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy cost, climate change including resultant incidents of flooding, insecurity in farming communities and structural bottlenecks to production.
“These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weakens profitability, and dampens investors’ confidence.
Not many investors can transfer cost increases to their consumers. The implication is that manufacturers and other investors are taking a big hit resulting from erosion of profit margins as a result of consumer resistance and weak purchasing power.
“Tackling inflation requires urgent government intervention to address the challenges inhibiting production, productivity and security in the economy. The real sector of the economy needs to be incentivized to reduce production costs.
“The government needs to offer concessionary import duty on intermediate products for industrialists. The effects of high energy cost and exchange rate on inflation is quite significant.
It will be very difficult to tame inflation if we do not substantially fix power, logistics and forex and security issues. Regrettably, there are no quick fixes in these areas. But it is important to prioritise these issues and drive accelerated progress with the right strategies. Hopefully the proposed economic stabilisation measures embodied in a bill currently before the national assembly would substantially address these concerns from the fiscal side.
Meanwhile, the sub nationals have critical roles to play in mitigating the challenge of food insecurity and food inflation. They are closer to the stakeholders in the agricultural and food value chain and better placed to impact agricultural productivity. The provision of rural roads by the states is also very critical to reduce transportation costs and ease access to markets.
