The Director-General, Lagos Chamber of Commerce & Industry (LCCI), Dr Chinyere Almona, has said last month, Nigerians paid more for goods and services than they did a year earlier in July by a relatively high rate of 19.64 per cent.
Speaking to newsmen, during the weekend, she said Nigeria had six consecutive months of increased inflation, with the rate at an almost 17-year high.
She attributed the high inflationary rate to rise in food and energy prices and forex scarcity for imports of critical raw materials.
The LCCI boss also stated that constrained production due to insecurity in some agricultural sites across the country contributed to the high inflation rate.
Almona said on the other hand, core inflation increased to 16.26 per cent from 15.75 per cent because of price increases in gas, liquid fuel, solid fuel, garments, and passenger transport by road and by air.
According to her, the high cost of aviation fuel, otherwise known as Jet A1, drove the cost of air transport to the roof and became a major driver of the July inflation rate.
She said looking at the states’ inflation rates, the three lowest rates were recorded in Borno, Jigawa, and Kaduna, while the highest rates were found in Akwa Ibom, Ebonyi, and Kogi states.
These records, she said, reflect the lockdown on food items in the northwest and northeast since the food items are not brought to the south due to insecurity constraining the movement of goods.
Almona, noting that this is a warning signal of massive food waste in some parts and scarcity in others, therefore, urged the government to offer a targeted intervention for the movement of food items from production areas to high-demand areas to cushion inflationary pressures.
She lamented that for manufacturers, input prices have spiked as prices of items such as diesel, which most firms depend on for powering their factories, have continued to rise, causing unbearable rise in cost of production.
According to her, rising cost of production also translates to higher consumer prices. “Nigeria’s energy crisis is worsened by the poor supply of electricity and a bumpy road to renewable energy deployment,” Almona added.
She advised on the need for a good mix of fiscal and monetary policies to tackle the core drivers of the inflation scourge.
She also called for targeted financing for critical sectors like agriculture, food processing, aviation fuels, transport, and forex availability for manufacturing input.
Almona argued that it is obvious that the government’s intervention so far has not impacted the inflationary pressures that keep rising till now.
“Without concrete and quick steps to intervene, the rising tide of the inflation rate may continue into the end of the year,” she stated.
The LCCI chief also said there were fears of falling growth due to constrained production in the past months.
The Chamber, she said, has recommended the need for special interventions in critical sectors and especially focusing on subsidising production to reduce the burden of rising cost of production.
She criticised the Central Bank of Nigeria’s (CBN’s) reversal of concessionary interest rate of five per cent on its intervention loans to nine per cent effective July 20.
Almona argued that CBN’s action does not show sensitivity to the burden on businesses at this time when they are struggling with sourcing forex, rising fuel costs, and massive disruptions to production lines due to insecurity.
She urged the CBN to look beyond hiking rates to taking definite and articulated actions that address the factors driving the inflationary pressures.
