Anthony Areh
The Lagos Chamber of Commerce and Industry (LCCI) on Wednesday described the nation’s current inflation situation as a troubling phenomenon.
Dr Muda Yusuf, Director-General, LCCI said this while reacting to the February inflation rate of 17.33 per cent against the 16.47 per cent recorded in January as detailed by the National Bureau of Statistics (NBS).
Yusuf said key drivers of the inflation were transportation costs, logistics challenges, exchange rate depreciation, forex liquidity issues, hike in energy prices, climate change, insecurity in many farming communities and structural bottlenecks to production.
According to him, the inflation rates drivers are supply side variables that are cost and output related.
Yusuf stressed the need for government’s urgent intervention to address the challenges crippling the supply side of the economy.
“Any mitigation measures would have to be situated in the context of these variables.
“Even the Central Bank of Nigeria (CBN) has admitted that the potency of monetary policy instruments in tackling inflation is weak.
“It is not in all cases that high production costs can be transferred to consumers.
“The implication is that producers are also taking a hit and this is more pronounced where the demand for the product is elastic, these are products that consumers could readily do without.
“Tackling inflation requires urgent government intervention to address the challenges bedeviling the supply side of the economy.
“There is also a need to worry about the monetary dimension resulting from CBN financing of fiscal deficit. The amount has been ballooning in recent years and highly inflationary,” he said.
The core inflation and food inflation that rose respectively from 11.85 per cent and 20.57 per cent in January further increased to 12.38 per cent and 21.79 per cent in February 2021.
