Petrol price hike: Inflation figures may go up – MAN

Following the increase in price of Premium Motor Spirit (PMS), popularly known as petrol, the Manufacturers Association of Nigeria (MAN), said there is a high possibility of a rise in inflation figures, impacting household budgets.

DAILY POST recalls an increase in the price of petrol on Tuesday from about N568 per litre to N855 per litre, which has been implemented across NNPC filling stations.

Reacting on Wednesday, MAN, in a statement by its Director-General, Segun Ajayi-Kadir, said the Small and Medium-sized Enterprises (SMEs) which often operate on thin margins, could be hard-hit by the development.

It said the the decrease in purchasing power may lead to reduced demand for non-essential goods and services, affecting businesses across various sectors, adding that “these are pointers to the high possibility of a rise in inflation figures, impacting household budgets,

“So, in terms of what the impact might be and judging from what we have witnessed in the past, the cost of transportation may increase, and so would the prices of goods and services. As the cost of petrol rises, consumers will spend more on transportation and energy, leaving them with less disposable income.”

He expressed worry about further impact on the “already lackluster performance of the manufacturing sector”.

“In particular, there is no doubt that it will add to production input and logistics costs.

“These will lead to higher prices and in the face of dwindling disposable income of the average Nigerian,” he said.

Ajayi-Kadir also pointed out that the manufacturing performance would be negatively impacted as a “further deep in consumer demand will see manufacturers’ unplanned inventory rising and reduction in capacity utilization”.

He said businesses may need to adjust their pricing strategies, and this could “lead to reduced profit margins if consumer demand weakens”.

“Small and medium-sized enterprises (SMEs), which often operate on thin margins, could be particularly hard-hit.

“The increased costs could force some to scale down operations or even shut down if they are unable to pass on the additional costs to consumers,” he said.