Market prices run wild
2017 budget can’t help workers, says Labour
One day after presenting his 2017 Budget which prioritised job creation, power and transport infrastructure for economic recovery, President Muhammadu Buhari was given a piece of very bad news.
Nigeria’s data agency — the National Bureau of Statistic — yesterday released inflation numbers showing consumer prices for the month of November increasing by 18.48 percent year-on-year after an 18.3 percent record for the previous month. The November numbers are well above market expectations of 18.4 percent gain as the inflation rate accelerated for the tenth straight month hitting its highest level since October 2005. On a monthly basis, consumer prices went up 0.8 percent at the same pace as in the previous period, just as prices continued to rise for housing, electricity and food.
Rising cost of food and other consumer goods will continue to put pressure on wages, further weaken the exchange rate and cause interest rate to move up while keeping prices perpetually high.
Labour says its members are angry because the 2017 budget as presented by the President on Wednesday did not consider the welfare of its members in view of the inflation numbers. “Increase in inflation without any addition to wages means the government don’t care about welfare of workers in the country,” said, Mr. Idowu Adelakan, who chairs the Lagos State Council of the NLC.
“Rising cost of goods and services and failure to consider workers’ welfare means that government’s anti-corruption war is directed only at the poor and not the rich,” Adelakan said.
“The budget is full of repetition without any good adjustment for workers’ wellbeing. Market women keep lamenting that no one is patronising them and this is because of low purchasing power of citizens.”
In the same vein, Director General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said high rate of inflation is a trend that the country has been struggling with in the last one and half years. He said it the major cause of rising poverty level in Nigeria.
“The key drivers of inflation are: currency depreciation, high energy cost, scarcity of foreign exchange, trade policy and import duty issues,” Yusuf said,
“Inflation is poverty because it reduces purchasing power. This is of great concern to us. The truth is that we need to augment some of these things we produce with import because, if we need to tackle this issue of pricing, we must get it right.”
The inflation rate now measured as 11-year record high, will keep standard of living under pressure, with general rise in prices, high costs of funds and extended negative rate at 4.48, which is a disincentive for investment.
Mr. Biodun Adedipe, an economist, said Nigeria found itself in a unique challenge of inflation and stunted growth, which only requires a clear-cut direction to tackle, particularly with identifiable infrastructure investment that would stimulate the economy and create jobs.
Specifically, the latest rise in inflation was driven by higher prices for housing, electricity and food, a separate index, which rose to 17.19 percent from 17.1 percent in October, according to the NBS.
“During the month, the highest increases were seen in housing, water, electricity, gas and other fuels, clothing materials and other articles of clothing, books, liquid fuel, passenger transport by air, motorcycles and shoes and other footwear.
“The rise in the food index was mainly driven by increase in prices of imported foods, meat, bread and cereals and Fish. On a month-on-month basis, the Food sub-index increase by 0.88 percent in November from 0.86 percent recorded in October,” NBS said.”
The development showed that the country is still deep into importation of food items that gulp hundreds of millions of foreign exchange, most of which can be produced locally, but hampered by infrastructure deficit.
However, communications and insurance sectors recorded the slowest pace of growth in inflation index in the period under review, at 5.61 percent and 6.76 percent year-on-year respectively.
Meanwhile, although the headline inflation rose year-on-year, it was at a decreasing rate of 0.78 per cent in November, compared with 0.83 per cent in October, an indication of moderation.
The Urban index, which measures level of inflation in the cities as against the rural areas, rose by 20.07 percent (year-on-year) in November from 19.91 percent recorded in October.
On the other hand, the Rural index increased to 17.10 percent in November, from 16.95 percent in October, while on month-on-month basis, the urban index eased by 0.03 percent and the rural index was also down by 0.05 percent.