Economy

Inflation: NACCIMA calls for urgent action to address spiraling inflation

Inflation: NACCIMA calls for urgent action to address spiraling inflation
Written by Maritime First

….As LCCI urges FG to focus on supply-side constraints*

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has called for urgent action to address the underlying causes of the nation’s current inflationary trends.

Amb Ayoola Olukanni, Director-General, NACCIMA, made the call in reaction to the 18.17 per cent March inflation figure as released by the National Bureau of Statistics (NBS).

Olukanni said the call was pertinent to enable the nation achieve the 2.5 per cent projected growth for the year

The newsmen report that the inflation rate for March rose to 18.17 per cent from 17.33 per cent recorded in February, representing a 0.82 per cent increase.

Similarly, food inflation, spiked to 22.95 per cent from 21.79 per cent recorded in the previous month, translating to 1.16  per cent increase.

The rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam, and other tubers, Meat, vegetables, fish, oils and fats, and fruits.

Also read: Inflation now 18.17%– NBS

The NACCIMA DG said that the most significant underlying cause to address was the issue of insecurity and its attendant impact on agricultural production, especially by smallholder farmers.

According to him, many of these farmers were either unable to engage in active farming or evacuate their farm produce.

He added that the shortage of foreign exchange, depreciation in the exchange rate and huge import bill have also all combined to produce the upward inflationary trend that was being witnessed.

“NACCIMA on several occasions, in recent past, has warned that the upward trajectory of inflation is what will happen if  action is not taken to address underlining causes of the trends. Steps must be taken by government to arrest the trend.

“In all of these, perhaps the most important is the issue of insecurity, because business and productive activities only thrive in a safe and secured environment.

“An enduring solution must, therefore, be found to the problems of banditry and other sources of  insecurity across the country,” he said.

Olukanni added that the current low productive capacity in various sectors of the economy were also due to the recent massive power outages and consequential effect on electricity supply to homes and industries.

He, therefore, stressed the need to expedite action on the energy component under the Economic Sustainability Plan, as part of the strategic options designed to address the energy crisis.

“To address food inflation there must be significant improvement in road infrastructure, to facilitate movement of farm produce and goods across the country.

“This is to strengthen the food supply chain and reduce cost of transportation from the farm to the market.

“More support should also be given to the SMEs in the agribusiness sector, as they are important in the quest to ensure food security and combat food inflation.

“Movement of goods within the country should also not be disrupted by incessant roadblocks across our highways,” the NACCIMA DG said.

In another development, the Lagos Chamber of Commerce and Industry (LCCI) has advised the Federal Government to address the challenges constraining the supply side of the economy to tackle inflation.

Dr Muda Yusuf, Director-General, LCCI, gave the advice on Thursday in reaction to the 18.17 per cent March inflation figure as released by the National Bureau of Statistics (NBS).

The newsmen report that the March inflation rate rose to 18.17 per cent from 17.33 per cent recorded in February representing 0.82 per cent increase.

Similarly, food inflation, spiked to 22.95 per cent from 21.79 per cent recorded in the previous month translating to 1.16  per cent increase.

The rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam, and other tubers, Meat, vegetables, fish, oils and fats, and fruits.

The DG said that key drivers of the mounting inflation which were essentially supply-side issues included currency depreciation, acute illiquidity in the foreign exchange market, rising transportation costs and logistics challenges.

Others, he said, were agricultural output disruptions caused by growing insecurity,  hike in energy prices,  climate change  and structural bottlenecks to production.

Yusuf stated that the solution therefore, would have to be situated in the context of these causal factors.

“The March headline inflation of 18.17 per cent is the highest in four years and more worrisome is that food inflation has accelerated to 23 per cent.

“The major issues are cost and output related.

“It is not in all cases that high production and operating costs can be passed on to the consumers.

“The implication is that producers are also taking a hit and this is more severe where a product or service is faced with high demand elasticity.

“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 growing fiscal deficit, especially the Central Bank of Nigeria financing of the deficit.

“It is characterized as inflation tax by a school of thought in economic literature,” he said.

 

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