LIVE UPDATES
The business community, Economists and policy analysts have shared various insights into the causes of the increase in the country’s inflation rate month by month.
From 13.25 per cent in 2019; 16.95 per cent in 2020; and 18.85 per cent in 2022, Nigeria’s inflation rate rose to 31.70 per cent in February from 29.90 per cent recorded in January 2024.
The headline inflation further rose to 32.63 per cent in March 2024, the National Bureau of Statistics said in its latest CPI and inflation report.
The business community, Economists and policy analysts have shared various insights into the causes of the increase in the country’s inflation rate month by month.
This is despite the Central Bank of Nigeria’s Monetary Policy tightening stance on inflation control.
Analysts say the inflation spike is driven by three major factors: escalated energy costs, the impact of exchange rate fluctuations, and ongoing insecurity concerns.
The Federal Competition and Consumer Protection Commission (FCCPC) also recently identified another reason which it describes as "Market Cartels"
The Acting Executive Vice-Chairman of FCCPC, Dr Adamu Abdullahi,
asserted that market cartels are also to be blamed for the rising cost of food items nationwide.
“The surge in food prices can be attributed to various factors, including market cartels, price fixing, hoarding and gouging or lack of transparency in pricing,” he said.
“What we have discovered is that most products now have associations, even the sachet water producers.
“When you have your eggs that you brought from your farm to sell at Wuse market in Abuja, the association of egg sellers will tell you that you have to sell to them at cheaper rates, while they resell to consumers at higher prices.
“This has now resulted in the emergence of `cartels’ and cartels, anywhere in the world, are not acceptable.
A week ago, the Managing Director/Chief Executive Officer of Lagos Commodities and Futures Exchange (LCFE), Mr Akin Akeredolu-Ale, identified yet another driver of food inflation in the country.
Akeredolu-Ale said, “On food inflation, there was a retreat that was organised by the SEC for the senate committee on the capital market recently, and one of the senators that came said that when a truck is coming from Yola to Lagos, because of the various stops on the road, you will discover that they spend about N1.5 million on produce inspectors here and there.
“When people are bringing paddy to us to Imota when they are entering Oyo from Ilorin, they pay produce inspectors; when they are entering Ibadan and they get to Ogere, Lagos/Ibadan Expressway, to enter Ogun State, they pay. As they leave Ogun State and head to Lagos, they pay the local government levy too.
“And when they enter Lagos, some of them would rather go through a particular route. By the time they get to their destination, they will have spent over N2 million. They don’t mind spending the money because they are going to pass the cost on to the commodity and when they do that, it will be passed on to the final consumer so effectively.”
Be that as it may be, what can be done for a successful inflation country in Nigeria?
We agree with the Manufacturers Association of Nigeria, that it's high time the CBN "Go Beyond Monetary Policy Tightening For Inflation Controls."
The Association's Director-General, SegunAjayi-Kadir, recently urged the apex bank to think outside the conventional monetary policy framework and take pragmatic steps to quell the inflationary pressure and reposition the economy.
" It is worth noting that the Central Bank of Nigeria (CBN)'s approach of increasing the MPR has been adopted for almost two years without positive results."
Olusegun Likewise, Olusegun Aganga, a former Minister of Industry Trade and Investment, also stressed the need for the CBN to collaborate with the private sector stakeholders on inflation control.
Aganga, during the 51st annual general meeting of the MAN, noted that CBN alone cannot do it and needs the input of other stakeholders.
Nevertheless, Muhammad Sani Abdullahi, Deputy Governor, of the Economic Policy Directorate of the Central Bank of Nigeria (CBN), said that the CBN, anticipates a turnaround, with inflation expected to start its downward trajectory beginning in May 2024.
This optimism is based on a series of strategic measures to tackle rising inflation. Among these are the adoption of an Inflation Targeting Framework, deploying more active communication strategies, and shifting towards a tighter monetary policy stance.
