Economists have urged the government to tackle the challenges posed by high energy costs, and insecurity, which has slowed down food production and foreign exchange volatility, to tame the accelerating inflation in the country.
The economists spoke to Saturday PUNCH on the back of the country’s inflation rate climbed higher to 31.70 per cent in February, from 29.90 per cent in January 2024, according to the latest Consumer Price Index and inflation report by the National Bureau of Statistics on Friday.
Professor of Economics and Dean, College of Postgraduate Studies, Caleb University, Imota, Lagos, Segun Ajibola, said the inflation rate may not reduce if the economic fundamentals are not addressed.
According to the former president of the Chartered Institute of Bankers of Nigeria, 70 per cent of inflationary pressure in Nigeria is coming from the direct cost of consumables of both local and imported commodities
“Some of these things don’t happen by chance and we have been on this issue of inflation for months and it shows the fundamentals have not been addressed. If we keep pursuing tight monetary policies and curtail the total money supply in the system believing that we have too much money in the system and fuelling inflation, we are wrong.
“If at all, we have too much money in circulation, it is a derived factor and not the direct cause of our kind of inflation in Nigeria. 70 per cent of inflationary pressure in Nigeria is coming from the direct cost of consumables of both local and imported commodities.
“It is called push inflation because the cost of production has increased massively for reasons well known to us. We are also highly import dependent and we have seen the move in the foreign exchange market. Food inflation is also caused by the cost of inputs that are applied to our agricultural produce. We need to address the problem of costs of energy, transportation and other inputs before we can get a reduction in the inflation rate,” he told Saturday PUNCH in a telephone chat on Friday.
Also, the Chief Economist/Managing Editor of Proshare Nigeria, Teslim Shitta-Bey, noted that high insecurity in the country’s farm belt had been a major driver of inflation.
According to Shitta-Bey, incessant kidnapping and attacks on farmers and motorists in the food belt had reduced farm-gate production.
“It is not just about the farmers. Even if the farmers produce and the people who transport the food are waylaid, that has happened several times between the North and the Southern border towns, which has put a premium on the cost of transportation. So, if transporters would move goods, they have to charge higher because of the high risk. “Insecurity is a major driver of food inflation, which currently is about 37 per cent,” he explained.
Shitta-Bey added that manufacturers had been grappling with the increased cost of energy, adding that the two drivers of inflation have had a significant impact on the cost of production.
“The current problem is a supply-side challenge. That is one of the reasons no matter how high the CBN increases its monetary policy rate, it is not likely to curb inflation,” he asserted.
The Managing Director of Afrinvest Securities Limited, Ayodeji Ebo, attributed the current price hikes to fluctuations in the exchange rate, stressing its pervasive impact across all sectors.
The Afrinvest MD told Saturday PUNCH that the government needed to intensify efforts in stabilising the exchange rate.
