Former Director-General, Lagos Chamber of Commerce and lndustry (LCCI), Dr Muda Yusuf has said inflation has remained intense over the past seven months. He observed a significant factor of base effect in the inflation outcomes.
He said at 15.99 per cent inflationary pressure is still intense with the intensity of food inflation even more troubling, at 18.34 per cent.
He spoke to The Nation on “October inflation’ and implications. He explained that declining inflation is not synonymous with price reduction but rather implies that the rate of price increase has dropped.
Yusuf, who is and CEhief Executive Officer (CEO), Centre for the Promotion of Private Enterprise ( CPPE), lamented that over the last couple of months, there has been sustained price increases on a month-on-month basis even with declining headline inflation.
The implications of high food prices are quite profound; according to him, they include the aggravation of poverty as access to food becomes more difficult, especially for the citizens at the bottom of the pyramid.
He also stated that it increases the risk of malnutrition and associated health challenges, increased social tension and discontent within the polity and reduces the demand for non-food items in the economy as citizens spending priorities are adjusted in favour of food.
On businesses, the former LCCI chief said it leads to drop in sales and turnover as a result of weak purchasing power, low profit margins as aggregate demand drops following the collapse of real incomes. Others he mentioned are high production and operating costs and high number of business mortality.
On the way forward, he advised the government to fix the challenge of high inflationary pressures and address the critical drivers of inflation in the economy. He said the critical drivers of the economy includes, the rapidly depreciating naira exchange rate, illiquidity in the foreign exchange market, monetisation of fiscal deficit and high cost of logistics.
He said: “Insecurity around the country, especially the farming communities, bottlenecks and corruption in the cargo clearing processes. Extortion on the major highways across the country, Climate change issues affecting agricultural production. There is, therefore, a need to review fiscal policy measures to ease the cost of food and an emergency policy to address the challenge of high food prices, especially staple food.”
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