MON 18 OCT, 2021-theGBJournal- Although the economy witnessed an incremental deceleration in inflation over the last couple of months, high inflationary pressures remain a major concern to stakeholders in the Nigeria economy, says Centre for the promotion of Private Enterprise (CPPE) in a note to theGBJournal.
According to the National Bureau of Statistics [NBS], headline inflation decelerated by 0.38% in September from 17.01% in August to 16.63%. However, on a month-on-month basis, there was a further increase of 1.15% between August and September.
Meanwhile, food inflation, which is the biggest worry for the poor, decelerated by 0.73% from 20.3% in August to 19.57% in September. But on a month-on-month basis, there was an increase of 1.26% between August and September.
The Core inflation, which related largely to non-agricultural products, maintained an upward trend. It accelerated by 13.74% in September as against 13.41% in August, an increase of 1.24%. This was largely a reflection of the impact of the further depreciation in the naira exchange rate.
The Centre highlighted the implications of the trend that still worries many business executives in the country. Among that is the escalation of production and operating costs for businesses, which leads to erosion of profit margins, drop in sales, decline in turnover and weak manufacturing capacity utilization, high food prices which impacts adversely on citizens welfare and aggravates poverty, weak purchasing power which poses significant risk to business sustainability and price volatility which undermines investors confidence.
To tame the current inflationary pressure, CPPE like several other stakeholders, recommended that the federal government should as a matter of urgency reform the foreign exchange market to stabilize the exchange rate and reduce volatility, address forex liquidity issues through appropriate policy measures, address the security concerns causing disruption to agricultural activities and address the challenge of high transportation cost.
The Centre also recommended the reduction of fiscal deficit monetization to minimize incidence of high-powered money in the economy, manage climate change consequences to reduce flooding and desertification, the restoration of normalcy and good order at the nations ports to reduce transaction costs, the reduction of import duty on intermediate products and raw materials for industries to reduce production costs, especially in the light of the sharp depreciation in the exchange rate, address concerns around high energy cost and creation of an investment friendly tax environment.
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