- Review import tariffs on inputs to check inflation says, Yusuf
- ‘Currency depreciation is disastrous for import-dependent economy’
- How to reduce inflationary pressures, says Owoh
From 2009 until four years ago, Raheem Adelabu, who until recently was a business analyst with a leading insurance firm and devout Muslim, was used to buying three rams to celebrate Eid-el-Kabir. But since 2017, the festive season has seen a reducing balance for his family as well as parents and in-laws, who were hitherto given a ram and bag of rice each.
In the last two celebrations, Adelabu, whose commitment to Islam has taken him to Hajj three times, could only afford a ram, which he shared as his family tradition demanded with his parents and in-laws.
Tomorrow’s celebration was largely uncertain for the father of four, until Saturday when his sibling wired $250 (N125,000) from the United States to support him. Yesterday, Adelabu, who has been unemployed since 2017, turned up at Ejigbo livestock market with N80,000. He left the ram market with a deep sigh, without a ram.
At the market, like others in Lagos, the price of ram ranges between N120,000 and N400,000. Ahmed Murtar, a trader, told The Guardian, this is the most expensive Sallah he has witnessed in his 72 years.
“Thirty-seven years ago when I came to trade in this market, a ram was N700. But things have changed. Rams are very expensive now. Even in the North, where people think they are cheap, only very few people can afford to slaughter rams to celebrate,” he said.
For many Muslim faithful, sadly, prices of alternatives (frozen fish and chicken), as well as rice and tomatoes, are hitting the roof. At Ikotun market, young Bukky Bade could not do anything decent with N20,000 her husband, who took to barbing after losing his job at a construction firm, gave to her and their two kids.
“I came to the market today hoping food will be cheaper. I was wrong; they are even more expensive than two days ago. A 25-kilogramme bag of rice is N13,000. If I buy rice, I will be left with N7,000, which is less than the cost of tomatoes and chicken. I don’t care about ram; I only want my children to eat a good meal, enjoy themselves and be happy. That is the least I should ask for Sallah but it appears my budget cannot afford it,” the young woman said in frustration.
The story of Adelabu and Bade underscores the reality of millions of Nigerian Muslims, who are compelled to take on the harsh economic reality in their strides or depend on more buoyant neighbours as the world marks Eid-el-Kabir tomorrow.
In fact, some households borrow, while others beg to feed as rising prices of essentials and declining incomes take a toll on survival. Food inflation accelerated to 22.95 per cent, the highest since the current Consumer Price Index (CPI) base year (2009), in March. But the National Bureau of Statistics (NBS), which has the responsibility to declare the official inflation rate, said prices started decelerating in April.
According to NBS, food inflation slowed down further to 21.83 per cent in June, from May’s 22.28 per cent year-on-year rise, while headline inflation also came down to 17.75 per cent, from its three-year high of 18.17 per cent in March. The data said the headline inflation increased by 1.06 per cent month-on-month in June, as against 1.01 per cent recorded the preceding month.
“Headline inflation reduced marginally by 0.18 per cent from 17.93 per cent in May to 17.75 per cent in June. The ‘all items less farm produce’ or core inflation, which excludes the prices of volatile agricultural produce stood at 13.09 per cent in June, down by 0.06 per cent when compared with 13.15 per cent recorded in May. The urban inflation rate increased by 18.35 per cent (year-on-year) in June from 18.51 per cent recorded in May, while the rural inflation rate increased by 17.16 per cent in June from 17.36 per cent in 2021,” the report stated.
“I may not be an economist. But I am knowledgeable enough to know that prices of items and essential services have increased by over 20 per cent between December and now. So, when I read about decelerating inflation, I am forced to ask if the survey was carried out in Nigeria or elsewhere.
“Did they also survey the prices of provision items that increase by at least 10 per cent every month? Did they survey the cost of transportation? Did they visit the fruit market? Did they find out the cost of beans? Where exactly did they get the figures?” John Ekwe, an architect and hotelier, asked.
Godwin Owoh, a professor of Applied Economics, had faulted the official inflation figures, saying they may have been tinkered with by authorities to achieve predetermined political objectives as they do not reflect market reality or are subjected to rigorous validation.
Nigeria’s last CPI figures came amid global concern over an inflation rate that seemed to test the nerve of people already battling the scourge of COVID-19 in different regions.
Last week, the Federal Reserve Chair, Jerome Powell, explained that the Americans might have to tolerate faster inflation in the coming months, suggesting that the problem is transitory as earlier thought.
Europe and other regions are currently fighting resurging inflation triggered by the expanded fiscal programmes rolled out to combat COVID-19 economic challenges. This supports the position of those who believe it is a temporary phenomenon.
But Nigeria’s inflationary pressure predated COVID-19 and it is often linked to foreign exchange crisis and insecurity.
Hence, Chief Consultant, B. Adedipe Associates Limited, Dr. Abiodun Adedipe, said Nigeria’s rising price challenge is unique and worrisome. The economist said the consistent depreciation of the Naira is disastrous for the country, which depends on importation for survival.
The value of Nigeria’s import ballooned in recent years, hitting N6.85 trillion in Quarter 1. That amounted to about 70.2 per cent of the total N9.76 trillion of the total foreign trade. Since the fourth quarter of 2019, the country’s external trade position has been in deficit; and quarter by quarter, the deficit had expanded.
The Lagos Chamber of Commerce and Industry (LCCI), yesterday, urged the government to focus on reducing the cost of energy, logistics, and other variables to moderate the effect of inflation on Nigerians.
Dr Muda Yusuf, outgoing Director-General of LCCI, said three principal drivers of inflation included cost-push factor, supply chain disruptions, and monetisation of fiscal deficit or inflation tax.
As average Nigerians balk at the credibility of the NBS data, Yusuf listed high energy costs, which included the spike in the cost of diesel, electricity, and aviation fuel, high transportation and cost of logistics, and high import tariff as major cost-push factor influencers.
“Headline inflation of 17.75 per cent is still a reflection of intense and persistent inflationary pressure on the Nigerian economy. Even more worrisome is the incessant high food inflation, which was 21.83 per cent in June.
“High inflation hurts investment, it is injurious to the welfare of the people and detrimental to the economy. The main factors that have disrupted output in the economy are also heightened insecurity, exclusion of some critical industries from the official foreign exchange window, trade policy issues, among others,” he said.
To ease inflationary pressure, Yusuf called for the reduction of energy and logistic costs, reviewing import tariffs on selected production inputs, improving productivity across all sectors, addressing insecurity, addressing the ports crisis, stemming exchange rate depreciation, and controlling the government’s reliance on the Central Bank of Nigeria (CBN) for deficit finance to comply with the CBN act.
He urged the Central Bank of Nigeria (CBN) to reduce its financing of fiscal deficit to levels provided for in the CBN Act, saying fiscal deficit financing by the Apex Bank acted as a major inflation driver.
“The infusion of this financing typically increases money supply and aggravates inflation. It is high-powered money and also characterised as inflation tax. Reports of interest payments of over N480 billion on Ways and Means financing by the apex bank between January and May 2021 is quite instructive,” he said.
