…Tasks Fiscal Authorities On Remedial Measures
The Centre for the Promotion of Private Enterprise (CPPE), a leading private sector advocacy group in Nigeria, has expressed its concern about a resurgence of high inflationary pressures in the economy after some few months of respite despite policy measures to tame inflation, especially on the monetary side.
The Centre, in a Note issued on Tuesday by its Director/CEO, Dr. Muda Yusuf, lamented that over the past months purchasing power had continued to plunge and that the ugly situation had been further exacerbated by the surging petrol price in the past months.
Specifically, the renowned economist noted that after a few months of deceleration, the inflation numbers had returned to a spiraling path with the Headline inflation rising to 32.7% in September 2024 as against 32.15% in August 2024, indicating an increase of 0.55%, just as there was a marginal increase of 0.30% in month-on-month inflation between August and September.
Similarly, the CPPE chief stated that Food inflation maintained its uptrend rising to 37.77% from 37.52% after decelerating in few months ago.
Apparently concerned about the inefficacy of measures by the government to tame the inflation rate, Yusuf said: “The reality is that the dynamics driving inflation are yet to be effectively subdued. These factors 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, weaken profitability, and dampen 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”, he added.
According to him, tackling inflation requires urgent government intervention to address the challenges inhibiting production, productivity and security in the economy as the real sector of the economy needs to be incentivized to reduce production costs.
Also, the CPPE’s Director charged the government to offer concessionary import duty on intermediate products for industrialists given the fact that the effects of high energy cost and exchange rate on inflation remained quite significant.
Yusuf further expressed concern that it would be very difficult to tame inflation if the government failed to substantially fix power, logistics and forex and security issues, lamenting that regrettably, there are no quick fixes in these areas.
Even then, he maintained that it had become imperative for the government to prioritize these issues and drive accelerated progress with the right strategies, adding that “hopefully the proposed economic stabilization measures embodied in a bill currently before the national assembly would substantially address these concerns from the fiscal side.”
In addition, the analyst pointed out that the state and local governments had critical roles to play in mitigating the challenge of food insecurity and food inflation as they are closer to the stakeholders in the agricultural and food value chain and better placed to impact agricultural productivity.
For instance, Yusuf identified the provision of rural roads by the state governments as also very critical to reduce transportation costs and ease access to markets.
