Muda Yusuf drops hints on how to fix inflation
Muda Yusuf, the Director General of the Lagos Chamber of Commerce and Industry (LCCI) has advised that for Nigeria to tackle inflation, it needs to fix supply-side challenges.
He emphasised that to achieve desired results, fiscal deficit monetizationproblem must be fixed by the Central Bank of Nigeria (CBN).
Dr Yusuf gave the hints in an interview in Lagos after the National Bureau of Statistics released the latest inflation figures.
The renowned economist revealed that CBN’s deficit financing, which has increased significantly, is highly inflationary due to its profound effect on money supply growth.
Other supply side issues remain security situation, cost of transportation and logistics, energy costs, exchange rate depreciation, and illiquidity in the forex market, according to him.
“Monetisation of fiscal deficit has lately become an added factor. From month on month perspective, inflation accelerated across all parameters and this underscores the fact that inflation remains a major challenge to investors and citizens,” he said.
He added that inflation was the biggest poverty accelerator because of the weakening of purchasing power as it weakened real income, eroded purchasing power, put pressure on operating costs, aggravated production costs, reduced sales, and negatively impacted profit margins across sectors.
“Tackling inflation would require fixing these supply-side challenges reining in on fiscal deficit monetization,” he urged.