As the inflationary trend continues
For three consecutive months, Nigeria’s inflation has surged unabatedly on double digits, despite efforts by authorities to ease off pressure on the economy.
From 12.8 per cent rate in March 2016, the country’s inflation rose by 13.7 per cent year-on-year in April, representing about 0.9 per cent increase.
With prospects of further surge as the economy precariously awaits the ripple effects of recent increase in fuel price, there are fears of worsening economic hardship, if urgent steps are not taken to cushion the impact.
As observed in the last quarter, price increases on goods and services occurred without a corresponding rise in National Minimum Wage, NMW, as well as household incomes and access to finance, thus indicating a weakening consumer outlook.
A Consumer Pricing Index, CPI, report released by the National Bureau of Statistics, NBS, said in April electricity rates, kerosene prices, impact of higher premium motor spirit, PMS, prices and vehicle spare parts were the largest contributors to the core sub-index of inflation.
While high patronage of imported goods and non-availability of adequate foreign exchange are also at the root of the crisis, inconsistency of fiscal policies and inability of domestic industries to meet consumer demands are also contributors.
Although government has pursued counter policies and shake-ups on some core sub-indices of inflation- hiking tariffs, pump prices and constraining foreign exchange, the move has rather triggered a backlash of higher food prices in fish, bread and cereals, and vegetable groups.
Market prices of major food items like rice and tomatoes have ominously skyrocketed as a bag of rice currently sells for between N17,000 and N18,000 as against N12,000 in December 2015, while a basket of tomatoes sells for N30,000 as against N1,700 in January 2016.
Stable food items such as yams, garri, potatoes and semolina, have also added between 80 to 100 per cent of new prices, just as transportation and other services surged markedly, painting a frightening picture of deepening economic depression.
Undoubtedly, the failure of price control mechanisms in the country has also exposed market prices to undue influence from business owners, who take advantage of misdirected policies to hike.
This underscores the need for effective cooperation between government and private business owners to keep inflation low.
As no economy can grow without a thriving small and medium scale enterprises, SMEs, subsector, government should create an enabling environment for businesses to thrive.
Tightening of foreign exchange policies and outright ban on importation of some items not adequately produced in the country only adds crippling impact to the economy as an import-dependent nation.
Diversification of the economy must also go beyond mere rhetoric to actual implementation of the policy to reduce overdependence on oil, while also pursuing massive development of domestic industries to reduce importation.
In the meantime, to assuage the harrowing hardship currently experienced by the common man, government agencies must urgently enforce palliative measures in the transport sector and improve public infrastructures such as power, water and roads, while hopes for an improved economy are kept alive.