• Official data at variance with market realities
• Stakeholders await kickoff of price stability plan
• Cost of living crisis may fuel social unrest, labour experts warn
• CPPE: There is hope in new fiscal intervention plan
The proposed Inflation Reduction and Price Stability Plan and the awaited national wage review may have added another layer of uncertainty to the near-future outlook of the country’s inflation rate.
The awaited fiscal stimulus prescribes import duty waivers on some essential food items and incentives for local production as part of measures to ease the inflation crisis, which has reached a multi-decade high.
But there are fears that the expected wage increase, which is expected to take off in the next few months, could upset plans to rein in inflation and tip off the economy for another round of price spiral.
Already, advisories are pouring in on a potential replay of the infamous Udoji Award of 1972 should the government give in to the organised labour’s demand and raise the minimum wage beyond what is considered a normal threshold.
Amid the growing concern about a potential setback in any gain recorded in the fight against inflation, data released by the National Bureau of Statistics (NBS) at the weekend suggested the headline inflation remained high.
An independent survey by The Guardian showed the situation is underestimated by official data. Some prices of all food items have jumped by almost 400 per cent within the last year.
For instance, a 50kg basket of tomatoes, which was sold for N35,000 in 2023 has risen to N100,000 at the popular Mile 12 in Lagos and N120,000 in some markets during the Sallah festival.
The price of a 50kg bag of pepper also increased in multiple folds, selling for N120,000 against the previous N18,000 in 2023.
Similarly, a 50kg basket of bell pepper also called “tatashe” rose to N95,000 from N21,000 while the same quantity of red chili pepper also rose to N110,000 from N22,000 in 2023.
A 100kg basket of onions is now selling for N70,000, up from N25,000 in the period under review.
The Guardian reports that the price of a 50kg bag of local rice which sold for N48,000 last year, currently goes for N65,000 while the same quantity of imported rice pegged at N55,000 in 2023 is being sold between N80,000 and N90,000.
Also, the price of yellow garri has risen to N4,000. This was sold at N1,2000 last year.
Eggs and chickens have also jumped as a crate of eggs which was N1,800 in 2023 and is now N4,500.
Similarly, chicken of N8,000 now goes for N12,000 for old layers and N15,000 for broilers.
It shows that many interventions to tame the galloping inflation and food items are under attack by market realities as stakeholders insisted that the rising cost of living in the country may not show any green light in the coming months.
Nigeria’s inflation rate soared to a 28-year high last week to settle at 33.95 per cent and the food inflation rate reached 40.66 per cent on a year-on-year basis, a significant increase from the 24.82 per cent recorded in May 2023, when the President came into office, industry players, who spoke with The Guardian yesterday expressed worries that the rising cost of living is not getting the urgent attention it deserves.
Though there are indications that Nigeria’s galloping inflation and food inflation that seem to have defied all remedies are gradually bowing to pressure, there is however little to cheer about the recent drop in the month-on-month headline inflation and food inflation.
Even though food inflation hit an all-time high of 40.66 per cent in May from 40.53 per cent in April, the month-on-month rate in May 2024 was 2.28 per cent, also showing a decrease of 0.22 percentage points compared to the rate recorded in April 2024 which was 2.5 per cent.
Marginal as these may be, they present rays of hope for a challenged economy that has been struggling for breath over the last 14 months.
The persistent rise in inflation has continued to raise concern over the cost of living amid dwindling income among households.
This is just as Nigerians are lamenting bitterly as the policy actions by the current administration to mitigate the rise in inflation to address the fast-accelerating cost of living in the country were not yielding dividends.
Many businesses have already shut down while others have scaled down their operations following the hard economic reforms of the government.
Just recently, the Manufacturers Association of Nigeria (MAN) during a National Assembly investigative hearing organised by the Joint Committees on Power, Commerce, National Planning and Economic Development and Delegated Legislations, cried out that over 300 companies shut down resulting in 380,000 job losses over the past two months as a result of the high cost of production occasioned by electricity related expenses.
The Central Bank of Nigeria (CBN) on its part has been aggressive in the fight to bring down inflation by consistently tightening the monetary policy rate measures to reduce money in circulation.
However, experts say Nigeria needs to do more than just rely on monetary policy tools to provide solutions to the problem of inflation.
Acknowledging the challenges the Nigerian people are facing as a result of the high cost of living and encouraging the people to be patient, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun in a recent interview said that the Nigerian economy is moving in the right direction as policies of President Bola Tinubu’s administration have started slowing down food inflation.
“We’ve all seen what has happened in terms of stabilising the exchange rate and inflation which is headed in the right direction,” the Minister said at the time.
“If you look closely at the numbers that came out yesterday (April inflation figure), you will see that there is a slowing of the rate of increase of food inflation, things are moving in the right direction, government revenues are up, even oil revenues are up but not as much as we would like.”
The International Monetary Fund (IMF), last month, predicted Nigeria’s inflation rate will stabilise at 14 per cent in 2029, indicating a potential end to the current upward trend.
The IMF data suggested that the inflation rate will gradually decline from 23 per cent in 2025 to 16 per cent in 2026, 15.4 per cent in 2027 and 14 per cent in both 2028 and 2029.
This prediction was predicated on the effective implementation of government economic reform programmes of the present administration.
While some experts share the minister’s optimism, some believe that as long as the inflation is still headed north, Nigerians are still in trouble and again they argue that the margin is even too negligible.
Professor Godwin Oyedokun of Lead City University was particularly of the view that there is nothing to celebrate yet because inflation is still going up.
For the Chief Executive Officer of the Centre for the Promotion of Private Enterprises, Dr Muda Yusuf, tackling inflation requires urgent government intervention to address the challenges bedevilling production, productivity and insecurity in the economy. He said the real sector of the economy needs to be incentivised to ensure the moderation of production costs.
“The government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists. The same is true of investors in the logistics sector. The effect of high energy costs is devastating. It will be very difficult to tame inflation if we do not substantially fix power, logistics and forex and security issues.”
He said, unfortunately, there are no quick fixes in these areas. “But it is important to prioritise these issues and drive accelerated progress with the right strategies,” Dr Yusuf noted.
He said the sub-nationals have much bigger roles to play in mitigating the challenge of food insecurity.
“They are closer to the players in the agricultural and food value chain. They are therefore better placed to impact agricultural productivity. The food security situation is frightening and requires an urgent and emergency response.”
The CPPE boss said the impact of the Presidential Task Force on Food is yet to be felt just as the proposals contained in the government’s Inflation Reduction and Price Stability Plan will have a significant impact in moderating inflationary pressures if implemented.
The Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, said that while the current administration has lined out policy plans to improve the living standards of the masses, such plans must be backed by deliberate and quick responses.
He said the continuous increase in headline inflation rate was still worrisome because of the far-reaching consequences of the increase in disposable income of Nigerians and the ability of businesses to stay sustainable.
He said it was important that the federal government and sub-national governments respond urgently by implementing quick reliefs to ease the heightening pressure on the citizens and the business community at large.
Assistant General Secretary of the Nigeria Labour Congress (NLC), Chris Onyeka, recalled the survey on the cost of living conducted earlier in the year by the NLC, which led to the N615,000 earlier demanded as minimum wage by organised labour, comprising the NLC and the Trade Union Congress of Nigeria (TUC).
He faulted the NBS report on the National Average Cost of a Healthy Diet of N1,035 in April 2024, stating that to eat a good meal, one would spend about N3,000 to N5,000.
He said just as the cost of living is going higher, which of course is the reality workers are currently facing, sends a signal of huge problems in Nigeria.
“If the cost of living is going higher, the standard of living goes lower and so the implication for the minimum wage is that there is a need for us to review it immediately for the government to quickly accept what we told them to pay, given the realities on the ground that Nigerians are massively suffering.
“They should quickly put money in the hands of workers, who will now buy goods they can produce in Nigeria, which will now send a positive message to manufacturers, who will produce more, employ workers and sell more. These will help them service the interest on loans they borrowed from banks and help the financial sector to thrive, and the economy will benefit from that. What we have in Nigeria is that the government is looking for ways to reduce the purchasing power of workers. We are in a terrible situation,” he said.
The Director-General of the International Labour Organisation (ILO), Gilbert Houngbo, had said that without immediate action and increased resources to address the high cost of living could increase inequality and place greater strain on businesses.
According to him, with many countries having limited fiscal space to provide support to low-income households, the situation could fuel social unrest.
An economist at Pan-Atlantic University, Prof. Olalekan Aworinde, said Nigeria’s worsening inflation crisis would lead to a high cost of living, low standard of living, weakened production and more job losses.
He said: “People are not able to meet up with the standard of living in the economy, which will leave them in abject poverty and that is what we are experiencing in Nigeria. You will discover that people are not able to meet up with the necessities of life.
“Those employing individuals will not be able to produce up to the maximum capacity and the implication is that they will sack some workers, which means there will be a loss of jobs. With the economy now, there will be an increase in the government expenditure and tendency of accumulating debts.”
President of the Lagos State Chapter of the Association of Certified Fraud Examiners (ACFE), Dr Titilayo Fowokan said the government is implementing policies that encourage more government spending to alleviate the pains of the citizens and boost their income to be able to survive the current economic hardship.
