The May 2024 inflation figures released on Saturday by the National Bureau of Statistics (NBS) though shows that inflation still maintains an upwards movement, hitting 33.95 per cent, it actually slowed down, rising by 2.14 percent which was 0.15 percentage points lower than the rate recorded in April 2024 which was 2.29 percent.
Even the food inflation which hit all time high of 40.66 percent in May from 40.53 percent in April, the month-on-month rate in May 2024 was 2.28 percent, also showing a decrease of 0.22 percentage points compared to the rate recorded in April 2024 which was 2.5 percent.
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 NBS attributed the fall in the Food inflation on a Month-on-Month basis to a fall in the rate of increase in the average prices of Palm Oil, Groundnut Oil, Yam, Irish Potato, Cassava Tuber, Wine, and beverages.
Nigeria has witnessed hyperinflation inflation since the coming of the present administration following its policy reform measures especially the removal of fuel subsidy and the unification of the foreign exchange rates.
These two policies led to unprecedented increase in the prices of goods and services as the naira lost its value at the foreign exchange market leading to the high cost of imports, especially of raw materials. The hike in the prices of fuel also provoked a spike in the cost of transportation and general cost of doing business.
Added to this is the hike in the electricity tariff which was like the last straw that broke the Carmel’s back.
Many businesses have already shut down while others have scaled down their operations. Just recently, the Manufacturers Association of Nigeria (MAN) during a National Assembly investigative hearing organised by the Joint Committees on Power, Commerce, National Planning & Economic Development and Delegated Legislations, cried out that over 300 companies were shut down resulting to 380,000 job losses over the past two months as a result of high cost of production occasioned by electricity related expenses.
The central bank of Nigeria on its part has been aggressive in the fight to bring down inflation by consistently tightening of the monetary policy rate measures to reduce money in circulation.
However, experts say Nigeria needs to look at other tools rather than monetary tools in providing solutions to economy. They say Monetary authorities have tried their best and Nigerians have seen so many things they have brought, however, despite all of the efforts, the exchange rate is still high at N1,500/ $ heading towards N1,600/ $.
According to them, “Our solution would go beyond forcing and using monetary tools when we know that it is not just money supply influencing what we have.”
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 at 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 will like.”
The International Monetary Fund (IMF), last month predicted
Nigeria’s inflation rate will stabilize at 14 per cent in 2029, indicating a potential end to the current upward trend.
The IMF data had 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 an 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, Ibadan was particularly of the view that there is nothing to celebrate yet because according to him, 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 bedevelling production, productivity and insecurity in the economy. He said the real sector of the economy needs to be incentivised to ensure moderation of production costs.
“The government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists,” he suggests, adding, “The same is true of investors in logistics sector. The effects of high energy cost 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 subnationals 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 urgent and emergency response.”
The CPPE boss said the impact of the Presidential Task Force on Food is yet to be felt. Meanwhile the proposals contained in the government’s Inflation Reduction and Price Stability Plan will have a significant impact in moderating inflationary pressures if implemented. “We request that the plan be urgently implemented,” he concluded.
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.
“The impact of this are increase in the cost of goods, a reduction in the purchasing power of citizens, and ultimately, their earnings. All these fuel inflation in the economy,” she said.
She said what the government should be considering now are deflationary measures to cut down on spending and revitalise the economy such that the purchasing power of citizens can pick up positively.