CPPE Boss Says Key Inflation Drivers Not Receding
An Economic Expert and Chief Executive Officer of the Centre for the Promotion of Private Enterprises (CPPE) Yusuf Muda disclosed that key inflation drivers are not pulling back.
“Key inflation drivers are not receding, if anything, they have become even more intense”, stated the CPPE boss who highlighted the drivers as 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.
Yusuf while reacting to the latest report on CPI released by the National Bureau of Statistics that shows inflation in Nigeria has risen to 26.72 percent on Monday, said “Persistent inflationary pressures in the Nigerian economy continue to be a major cause for concern, especially because of the acceleration effect on poverty. Purchasing power has continued to slump over the past few months.
The headline inflation rose to 26.7 percent in September as against 25.8 percent in August. Food inflation maintained its uptrend rising to 30.64 percent in September. Economic growth may remain subdued while the risk of stagflation heightens
Muda stressed that elevated inflationary pressures also aggravate pressure on production costs, weaken profitability, erode shareholders’ value, and dampen investors’ confidence.
He emphasized that not many producers or service providers can transfer cost increases to their consumers noting that the implication is that manufacturers and other investors are taking a big hit.
He noted that products with high demand elasticity are more vulnerable and suggested that tackling inflation requires urgent government intervention to address the challenges bedeviling production, productivity, and insecurity in the economy.
“The real sector of the economy needs to be incentivised to ensure the moderation of production costs. The government could tweak tariff policies by granting concessionary import duties on intermediate products for industrialists. The same is true of investors in the logistics sector.
“The effects of high energy costs are 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. However, it is important to prioritise these issues and drive accelerated progress with the right strategies. “