Uncontrollable inflation fueling tense business environment, says LCCI

Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr Chinyere Almona, has lamented the persistent and uncontrollable rise in the inflation rate, reaching a 28-year record high of 34.60 per cent in November 2024, is fueling a tense business environment as elevated prices continue to constrain business operations.

Noting that the LCCI is concerned about the persistent and unabated rise in inflation, she said businesses should prepare for more stress from the burden of higher interest rates in 2025.

She added: “With the raging inflation rate, the many unsuccessful attempts of the apex bank to reduce the currency in circulation and approaching a high-spending festive period, we are set to contend with even higher interest rates as the expected outcome from the next decisions by the CBN Monetary Policy Committee (MPC).”

She explained that while the high inflation rate has far-reaching implications, reduced consumer spending is particularly worrying.

“High food and core inflation erode disposable income, reducing demand for non-essential goods and services. Businesses also face increased business costs, as rising transportation, rent, and energy costs elevate production expenses, shrinking profit margins. Moreover, the uncertain macroeconomic environment weakens the investment climate, deterring both local and foreign investments. Persistent high inflation further threatens economic growth by diminishing the competitiveness of domestic industries and stifling expansion,” she noted.

Pointing out that a coordinated effort is required to drive oil production to earn more FX which is needed to defend Naira in the short term, she said the new investments entering the oil fields can be supported with a sound regulatory environment to sustain and attract more.

“A disappointing negative record of our capital importation at $1.25 billion during Q3 2024 compared with $2.60 billion recorded in Q2 points to an unattractive environment for investors. Foreign Direct Investment, the most critical investment that shows long-term investor confidence, accounted for only $103.82 million (8.29 per cent),” the DG noted.

She said the renewed fight against terrorism, kidnapping, and all other vices that render farms unsafe must be sustained with more funding, intelligence gathering, surveillance technology.