Reason behind Nigeria’s rising inflation – CPPE

The Centre for the Promotion of Private Enterprise, CPPE, has explained that Nigeria’s inflation which rose to 32.70 per cent in September 2024 has remained unsolved because key drivers have not been effectively subdued.

Muda Yusuf, the Executive Director of CPPE disclosed this on Monday while reacting to Nigeria’s latest inflation rate.

According to him, it is troubling that Nigeria is witnessing a resurgence of inflation after it eased in July and August 2024 despite monetary interventions.

He noted that the purchasing power of Nigerians had plunged over the past few months exacerbated by the incessant increase in the price of Premium Motor Spirit (petrol).

He said: “The reality is that the dynamics driving inflation are yet to be effectively subdued.

“These factors include the depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy cost, climate change including resultant incidents of flooding, insecurity in farming communities and structural bottlenecks to production. These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weaken profitability, and dampen investors’ confidence.

“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 the erosion of profit margins as a result of consumer resistance and weak purchasing power.”

He stated: “Tackling inflation requires urgent government intervention to address the challenges inhibiting production, productivity and security in the economy. The real sector of the economy needs to be incentivized to reduce production costs.

“The government needs to offer concessionary import duty on intermediate products for industrialists. The effects of high energy costs and exchange rates on inflation are quite significant.

“It will be very difficult to tame inflation if we do not substantially fix power, logistics and forex and security issues.”

DAILY POST reports that Nigeria’s inflation rose to 32.70 percent in September 2024 from 32.15 percent recorded in August.