Centre for the Promotion of Private Enterprises (CPPE) says factors driving inflation dynamics have yet to be effectively subdued, hence the resurgence in the country’s inflationary figure.
Founder, CPPE, Dr Muda Yusuf, said this while reacting to the September inflation on Tuesday in Lagos.
The National Bureau of Statistics (NBS) said that the nation’s inflation stood at 32.70 per cent in September from 32.15 per cent in August.
Yusuf said factors such as depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy cost, flooding, insecurity and structural bottlenecks impacted the country’s inflation rate.
He noted that while these were largely supply-side issues, there was also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops.
He said that elevated inflationary pressures escalated production costs, weakend profitability, and dampened investors’ confidence.
“It is troubling that we are witnessing a resurgence of high inflationary pressures after some few months of respite in spite of policy measures to tame inflation, especially on the monetary side.
“Purchasing power had continued to plunge over the past few months and the situation had been further exacerbated by the surging petrol price.
“Not many investors can transfer cost increases to their consumers.
“The implication is 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,” he said.
Yusuf stressed that tackling inflation required urgent government intervention to address the challenges inhibiting production, productivity and security in the economy.
He said that the real sector of the economy must be incentivised to reduce production costs.
He added that government needed to offer concessionary import duty on intermediate products for industrialists.
This, Yusuf said, was because the effects of high energy cost and exchange rate on inflation was quite significant.
“It will be very difficult to tame inflation if we do not substantially fix power, logistics, foreign exchange and security issues.
“Regrettably, there are no quick fixes in these area but it is important to prioritise these issues and drive accelerated progress with the right strategies.
“Hopefully the proposed economic stabilisation measures embodied in a bill currently before the national assembly would substantially address these concerns from the fiscal side,” he said.
Yusuf also charged sub nationals to play their critical roles in mitigating the challenge of food insecurity and food inflation.
According to him, they are closer to the stakeholders in the agricultural and food value chain and better placed to impact agricultural productivity.
He said that the provision of rural roads by the states was critical to reduce transportation costs and ease access to markets.