OPS groans over adverse impact of inflation on production cost
Organised Private Sector (OPS) has raised the alarm over the high cost of production. It lamented the inability to reflect prevailing inflation trend in the economy on the pricing of products to the ultimate consumer.
Nigeria’s inflation rose to 18.17 per cent in March, peaking at three-year high and representing 19 consecutive months of increase. A development that forced more manufacturers of consumables to readjust their projections for the year.
Inflation is the rise in the general level of prices, often expressed as a percentage – which means that a unit of currency effectively buys less than it did in prior periods.
Rapid growth in inflation also means that standard of living of the populace will continue to decline, especially where wages remain constant and the prices of goods and service keep rising.
In a statement yesterday, OPS observed that what the creeping inflation trend meant to many Nigerians within the middle class and particularly those in the lower rung of the ladder was that their capacity to live a decent life is under constant threat of erosion, resulting in gradual decline in their standards of living.
The release read in part: “However, the rapid drop in purchasing power is not limited to individuals alone, corporate organisations are equally experiencing erosion in capacity to increase productivity due to the impact of galloping inflation on their resources.
“For the OPS, the rising inflation is also impacting the cost of input into their production, while they have been constrained to increase the prices of their products in commensurate measure to reflect the actual growth in inflation in the economy.
“At a media briefing two weeks ago, the Group Executive Director of Dangote Industries Limited, Edwin Devakumar, said Dangote Cement Plc has not increased the price of cement in the past 16 months despite the continuous rise in the cost of production and surging in demand for cement.
“Though most of the distributors and marketers of cement products are taking advantage of the increase in demand, which created artificial scarcity in the market to hike retail price. Devakumar said Dangote Cement has consistently maintained same ex-factory price for its products.”
OPS noted that in the other sectors of the economy such as medicare and fast moving consumables, many manufacturers have been forced to hike price commensurate with the prevailing inflation rate.
It added that the reason being that many of them feared that passing the excessive cost of production to their customers might lead to apathy for their products.
The manufacturers stated that some of them had resorted to reducing quantities to stay afloat in the face of their inability to raise price.
The statement continued: “Many manufacturing firms are also slashing production due to their inability to procure dollar for raw materials. Also, they are being pummelled by the rising cost of energy, transportation and cost of machinery as a result of the devaluation of the local currency.
“A senior official of a confectionery company said the firm has been struggling to remain afloat due to consistent increase in the prices of input coupled with the hike in both tariff on electricity and fuel prices by the government.”
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