Data from the National Bureau of Statistics (NBS) indicates that Nigeria’s inflation rate has taken a worrying turn, surging to 32.7% in September 2024, up from 32.15% in August 2024.
This increase, although marginal at 0.55%, signals a resurgence of high inflationary pressures after months of decline. The country’s food inflation rate also rose to 37.77%, from 37.52% in August.
Dr. Muda Yusuf, Director and CEO of the Centre for the Promotion of Private Enterprise, has expressed concerns about the rising inflation rate, citing the depreciating exchange rate, surging fuel prices, and logistics challenges as major contributors.
He highlighted that these supply-side issues, coupled with climate change, insecurity, and structural bottlenecks, have hindered efforts to curb inflation.
The impact of inflation on businesses and investors is significant, with elevated inflationary pressures escalating production costs, weakening profitability, and dampening investor confidence.
Manufacturers and investors are struggling to maintain profit margins due to consumer resistance and weak purchasing power.
To address these challenges, Dr. Yusuf emphasized the need for urgent government intervention to address production, productivity, and security concerns.
He recommended incentivizing the real sector of the economy to reduce production costs and offering concessionary import duty on intermediate products for industrialists.
Key factors contributing to Nigeria’s inflation rate include a depreciating exchange rate, which drives up import costs and contributes to inflation.
Surging fuel prices have a ripple effect on transportation, logistics, and overall production costs.
Logistics and supply chain challenges exacerbate inflationary pressures, while climate change and insecurity disrupt agricultural productivity.
Structural bottlenecks also hinder economic growth and contribute to inflation.
CPPE agrees that tackling inflation requires a multi-faceted approach. This includes urgent government intervention to address production, productivity, and security concerns.
Dr Yusuf also notes that incentivizing the real sector by reducing production costs through concessionary import duties is crucial and fixing power, logistics, and forex issues is essential to drive accelerated progress.
According to him, bub-national intervention, where states invest in rural roads and agricultural productivity, can also mitigate food insecurity and inflation.
As Nigeria struggles to contain inflation, policymakers must consider these recommendations to stabilize the economy and promote sustainable growth.
The proposed economic stabilization measures embodied in a bill currently before the national assembly are expected to substantially address these concerns from the fiscal side.
In the meantime, CPPE believes that states have critical roles to play in mitigating the challenge of food insecurity and food inflation.
“They are closer to stakeholders in the agricultural and food value chain and better placed to impact agricultural productivity.
The provision of rural roads by states is also vital to reduce transportation costs and ease access to markets.”
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