Following the National Bureau of Statistics (NBS)’s announcement last week that Nigeria’s inflation rate hit 18.17 per cent (year-on-year) in March, the Lagos Chamber of Commerce and Industry (LCCI) has raised concerns over the persistent increase in domestic prices of food commodities in the country.
The country’s headline inflation has continued to rise as the Consumer Price Index (CPI), which measures inflation, increased to 18.17 per cent (year-on-year) in March.
Statistically, this is 0.82 per cent points higher than the rate recorded in February (17.33 per cent), which makes it the highest reported in four years since April 2017. Speaking to New Telegraph in Lagos on the NBS’s report, the LCCI President, Mrs. Toki Mabogunje, explained that the continued uptrend in headline inflation was being fuelled by persistent food price pressure, with food inflation rising to yet another record high, with composite food index rising to 22.95 per cent in March compared to 21.79 per cent in February, the highest level since the current CPI series began in year 2009.
According to her, the current headline inflation almost doubles the Central Bank of Nigeria’s upper inflation target limit of nine per cent, which does not augur well for an economy that just exited recession marginally by 0.11 per cent. Mabogunje emphasised that the key inflationary drivers were basically supply- side issues, which are beyond monetary policy control.
She said: “We attribute the sustained acceleration in food prices to security concerns in northern and Middle-Belt region, which has continued to disrupt agricultural activities in those areas.
“High cost of transporting food commodities from farms to markets as a result of elevated energy prices such as Premium Motor Spirit (petrol) and diesel.
“Lingering productivity issues in the agricultural sector, leading to weak output outcomes. “High cost of imported food items (as well as agricultural inputs) due to foreign exchange shortage.”
Additionally, the LCCI president added that “we note the fourth consecutive increase in core segment of consumer basket, with core inflation rising further to 13.99 per cent in March 2021.”
Mabogunje pointed out that the major drivers of core inflation in recent months included lingering foreign exchange liquidity concerns, evidenced by the widening disparity between parallel market rate and Nigerian Autonomous Foreign Exchange Rate (NAFEX), pass through effect of the exchange rate depreciation on imported raw materials and finished items, elevated energy prices – PMS, diesel, upward adjustment of electricity tariff, and cargo clearing challenges at the ports.
According to her, the continued uptick in inflation has profound implications for all stakeholders in the economy, including households, businesses, and investors, adding that it weakens purchasing power and consequently worsens the poverty conditions, just as it escalates operating and production costs and erodes profit margins, as well as ultimately undermining investor confidence.
In addition, she stressed that galloping inflation complicated the pursuance of the price stabilisation mandate of the Central Bank of Nigeria (CBN) even at a time the bank is deepening its intervention efforts to boost credit flows to the real economy