The Centre for the Promotion of Private Enterprise (CPPE) has urged the Nigerian government to address supply side issues to succeed in its effort at taming the biting inflation in the country.
The Centre stated this in a commentary signed by its chief executive officer, Muda Yusuf, reacting to the latest inflation figures release on Tuesday by the National Bureau of Statistics (NBS).
The Centre bemoaned the resurgence of high inflationary pressures after few months of respite despite policy measures to tame the inflation, especially on the monetary side.
It lamented that the purchasing power of Nigerians had continued to plunge over the past few months, adding that the situation had been further exacerbated by the surging petrol price.
“After a few months of deceleration, the inflation numbers had returned to a spiraling path,” it said.
Latest inflation figures
BUSINESS METRICS reported earlier that headline inflation rose to 32.7% in September 2024 as against 32.15% in August 2024, an increase of 0.55%.
The CPI report also shows a marginal increase of 0.30% in month-on-month inflation between August and September.
Food inflation maintained its uptrend rising to 37.77% from 37.52% after decelerating in few months ago.
What CPPE is saying
According to CPPE, dynamics driving inflation in Nigeria are yet to be effectively subdued.
These factors, it said include 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.
While there is the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops, the CPPE argued that elevated inflationary pressures escalate production costs, weakens profitability, and dampens investors’ confidence.
On the flip side, it noted that not many investors can transfer cost increases to their consumers, adding 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 the inflation
According to the CPPE, 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,” it said.
It made case for concessionary import duty offer 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 prioritize these issues and drive accelerated progress with the right strategies.
“Hopefully the proposed economic stabilization measures embodied in a bill currently before the national assembly would substantially address these concerns from the fiscal side.
Task for governors
Meanwhile, the Centre identified that the sub-nationals have have critical roles to play in mitigating the challenge of food insecurity and food inflation.
It said: “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.”
