Financial experts on Tuesday expressed concerns on the country’s rising inflation rate currently at 12.82 per cent, and called for stabilisation of the exchange rate.
They reacted to July inflation figure released by the National Bureau of Statistics (NBS). The NBS said that the figure rose to 12.82 per cent, the highest ever recorded in the past 27 months. The latest increase represents 0.26 per cent points higher than the rate recorded in June, which was 12.56 per cent.
Professor Ayo Olowe of the Department of Finance, University of Lagos, told NAN that the rising inflation was cost- pushed occasioned by naira devaluation which affected the cost of production. Olowe said that the Central Bank of Nigeria needed to stabilise the exchange rate at the parallel market and Bureau De Change by ensuring foreign exchange availability.
He also called for introduction of various regulatory measures to check sharp practices including hoarding and diversion of foreign exchange. Olowe added that the government should aggressively pursue diversification of the productive sectors into local contents for inputs.
According to him, the government should enhance investment in the agriculture sector, mining and extractive industries. Olowe said that entrepreneurs using local contents should be encouraged to reduce importation.
Sheriffdeen Tella, a Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, noted that there had been fall in outputs due to COVID-19 lockdown. “There is a huge gap between demand and supply which necessarily causes inflation.
“The exchange rate has depreciated badly resulting in high cost of production and consequent rise in prices. “However, the major items that pushed up the prices are related to foods and local products, implying that the major problem has to do with output shortage,” Tella said.
On the way forward, he called on the government to speed up its fiscal intervention in domestic production. “It is clear that the CBN’s hope of bringing the inflation rate to single-digit cannot be realised before the end of this year,” he said.
Also speaking, Mr Okey Umeano, the Securities and Exchange Commission Head, Office of the Chief Economist, told NAN that the rising inflation was a challenge to the economy. Umeano said that the inflation rate figure was driven by several factors such as exchange rate scarcity, scarcity of certain goods due to lockdown, border closure and the generally poor state of the economy.
“It is unfortunate that this is coming at a time of rising unemployment in the country, which means more suffering for Nigerians. “It is a difficult time for the monetary authorities, as they are now between stimulating economic activity to drive down unemployment and trying to get hold of the rising inflation.
“Given the pressure on the currency and now this inflation, one will expect the CBN to take a tighter monetary stance -an increase in the monetary policy rate “This will further dampen economic activities. If there is no significant upward movement in oil prices in the near term, we are indeed in for very tough times.
“In all, however, let’s remember that we have an economy that is more resilient than it is often given credit for. “With some luck, we just might be able to ride this one out,” Umeano said.