Fatshimetrie looks at the causes of persistent inflation in Nigeria, CPPE reacts to the latest trends in September.
Amidst a turbulent economic climate, Nigeria is facing persistent inflation that continues to weigh on the country’s economy. The Centre for the Promotion of Private Enterprises (CPPE) recently commented on the September inflation figures, highlighting the key factors contributing to this worrying trend.
CPPE Founder, Dr. Muda Yusuf, has identified several key elements that are fueling the inflation dynamics in Nigeria. These include exchange rate depreciation, rising fuel prices, increased transportation costs, logistical challenges and supply issues, high energy costs, floods, insecurity and structural impediments that impact the country’s inflation rate.
According to Dr. Yusuf, these factors, mostly supply-side, combine with the seasonality of agricultural harvests to drive up the prices of some food items. This increased inflationary pressure has resulted in higher production costs, lower profitability and lower investor confidence.
It is worrying to see this resurgence of high inflationary pressures after a few months of respite, despite the measures taken to contain inflation. Purchasing power has continued to decline in recent months, a situation exacerbated by the increase in fuel prices. This reality weighs heavily on businesses that are struggling to pass on these cost increases to consumers, resulting in eroded profit margins and weak purchasing power.
Dr. Yusuf stressed the urgent need for government intervention to overcome the challenges hampering the country’s production, productivity and economic security. He stressed the need to incentivize the real sector of the economy to reduce production costs, including by offering preferential customs duties on intermediate products for manufacturers.
To contain inflation, it is essential to address energy, logistics, exchange rate and security issues, which are critical and require rapid and concerted action. The proposed economic stabilization measures could have a significant impact, but it is equally essential that local governments play a key role in addressing food insecurity and food inflation.
It is clear that concrete actions are needed to mitigate the effects of inflation on Nigeria’s economyBy investing in infrastructure, improving the efficiency of supply chains and fostering innovation in the agricultural sector, Nigeria could look forward to a more prosperous and resilient future in the face of current economic challenges.