By Merit Ibe
The Centre for Promotion of Private Enterprise (CPPE) has said tackling Nigeria’s galloping inflation trend requires urgent government’s intervention to address the challenges bedevilling productivity and fueling insecurity in the economy.
Director of the Centre, Dr Muda Yusuf, made the assertion following the persistent inflationary pressures in the economy now a source ofconcern following the acceleration effect on poverty.
With the headline inflation now at 26.7 percent in September as against 25.8 percent in August and food inflation on its uptrend at 30.64 per cent in September, Yusuf argued that nation economic growth may remain subdued while the risk of stagflation heightens.
He lamented the continued slump in people’s purchasing power over the past few months, and recommended that the real sector of the economy needs to be incentivised to ensure moderation of production costs.
“The government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists. The same is true of investors in logistics sector.
“The effects of high energy cost is devastating. We need a declaration of state of emergency in the energy and power sectors.
It will be very difficult to tame inflation if we do not fix power, logistics and forex.
“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.”
He pointed out that key inflation drivers were not receding, if anything, “they have become even more intense.” The key inflation drivers he listed include the depreciating exchange rate, surging transportation costs, logistics challenges, forex market illiquidity, astronomical hike in diesel cost, climate change, insecurity in farming communities and structural bottlenecks to production.
“These are largely supply side issues. Elevated inflationary pressures also aggravate pressure on production costs, weakens profitability, erodes shareholders value and dampens investors confidence.
Not many producers or service providers can transfer cost increases to their consumers. The implication is that manufacturers and other investors are taking a big hit. Products with high demand elasticity are more vulnerable.