Expert urges return to high import tariff
From the National Bureau of Statistics (NBS) has come a report that inflation rate in June moved to 16.5 per cent, from the 15.6 per cent recorded in May.
This is the fifth time the economy will be recording double digits rise in prices of goods and services since the beginning of the year. The NBS attributed the current rise to high costs recorded in electricity, kerosene, furniture and furnishings as well as road transport.

The implication of the little above one per cent increase in the inflation rate is loss in value of the Naira by the same percentage or increase in prices of goods by the same margin.

Meanwhile, a Development Economist, Mr. Odilim Enwegbara, has attributed the continuous rise in inflation, which is also known as consumer price index, to the increase in imported goods owing to the unofficial devaluation of the Naira through the recent floating forex strategy adopted by the Central Bank of Nigeria.

To curb the trend, he advocated increase in the country’s import tariff to check the growing importation as a way of boosting local production.The expert said: “We should reduce the current import dependency pressure on the naira. It’s time to return to high import tariffs. The high cost of doing business in Nigeria, which is discouraging both local and foreign greenfield investors in our manufacturing sector, cannot come down without massively investing in critical infrastructure along with the creation of a national development bank that grants single digit loans to critical real sector in a way that bypasses the current cutthroat banks’ interest rates.

“We need to discourage imports of things we can easily make locally. We need a special forex window to make it easy for importers of critical industrial inputs to easily access forex. “The current militancy in the Niger Delta that has reduced oil production and oil exports should be permanently resolved by the government, by taking the grievances of the oil producing states seriously. This way, more badly needed revenue from oil will come. The Value Added Tax (VAT) should be urgently increased to between 20% and 30% on luxury goods. This way, government can finance its 2016 fiscal deficit.

“It’s no longer hidden that those managing our monetary policy, particularly our forex policy, have failed woefully to the extent that it is now long overdue to inject into the apex bank new blood.”

According to the June Consumer Price Index (CPI) made available to The Guardian yesterday, the June inflation rate was higher than the May rate which stood at 15.6% by 0.9% points.

“In June, inflation continued to record relatively strong increases for the fifth consecutive month. The headline index increased by 16.5% (year-on-year), 0.9% points higher from rates recorded in May (15.6%).“While most COICOP divisions which contribute to the headline index increased at a faster pace, the increase was, however, weighed upon by a slower increase in three divisions; recreation and culture, restaurant and hotels, and miscellaneous goods and services”, the report revealed.

It also showed that the Core index increased by 16.2% in June, up by approximately 1.2% points from rates recorded in May (15.1%), even as it was shown that in June, the highest increases were seen in the electricity, liquid fuel (kerosene), furniture and furnishings, passenger transport by road, as well as fuels and lubricants for personal transport equipment.

According to the report, while imported foods continued to increase at a faster pace, the food sub- index, on the aggregate, increased, but at a slower pace in June relative to May. The bureau said that the index increased by 15.3% (year on year) in June up by 0.4% points from rates recorded in May.

“The index was weighted upon by a slower increase in the vegetables and sugar, jam, honey, chocolate and confectionery groups.“Month-on-month, the Headline index has moved in a sideways fashion since February, the first month of a pronounced increase in rates this year. Specifically in June, the index increased by 1.7%, lower by roughly 100 basis points from rates recorded in May.

“Year-on-year, both the Urban and Rural indices increased albeit at a faster pace in June. The Urban index rose by roughly 100 basis points from 17.1% in May to 18.1% in June, while the Rural Index increased by 0.7% points from 14.3% in May to 15.1% in June. On a month-on-month basis, both the Urban and Rural indices increased at a slower pace in June. The Urban index increased by 1.8% during the month, 120 basis points lower from 3.0% in May. In addition, the Rural index increased by roughly 1.6% in June, 90 basis points lower from 2.5% in May.

The percentage change in the average composite CPI for the twelve-month period ending in June 2016 over the average of the CPI for the previous twelve-month period was 11.4%, higher from 10.7% recorded in May. The corresponding twelve-month year-on-year average percentage change for the Urban index increased from 11.2% in May to 11.9% in June, while the corresponding Rural index also increased from 10.4% in May to 10.9% in June,” NBS said.