New fuel prices template: Nigerians should brace up for higher inflation- Experts
…it’s a temporary pain
..this is not the way to go
Following the release of the new template showing the new price of fuel, economists have said the new pump prices resulting from the removal of fuel subsidy will definitely drive up the already high inflation.
Reacting to the new prices, Professor Muhammad Akaro Mainoma, a Professor of Accounting & Finance and a one time Vice Chancellor, Nasarawa State University, Keffi, said, prices of goods will go up though in the short run.
He said there is no doubt the subsidy removal will cause some shocks for the economy, especially in the area of inflation, but in the long run, it will impact positively on the economy.
He said, the government was right in fixing the price limit because it has a responsibility to protect the market.
According to him, “The idea of deregulation is not about allowing everybody to do just what he wants to do. We are in a market where there are a lot of ignorant people, so the government has a responsibility to protect the people.
“If we allow those that know to cheat those that don’t know, there will be chaos. That is why since they know what is the reasonable margin that people can get when they buy the product and sell, there should be a ceiling within the competition so that you cannot sell beyond this, but if you decide to sell lower so that you attract customers you are welcome.”
He said there is a lot the government can do to mitigate the effect of the higher prices of petroleum products on the people.
He said the government needs to intervene in the area of transportation, and in the area of food supply. In his words, “If the government is going to help the situation, two things are very very essential, let the government provide transportation so that those in the transport sector will not increase their fares beyond the reach of the ordinary citizens which will also push food prices in the market higher. This is also the time when the government should supply food to the market to force prices down.”
Supporting government intervention in the area of fixing prices, Lead Director Centre for Social Justices ( CSJ), Mr. Eze Onyekpere said that the market is deregulated does not mean that the retailer should be allowed to exploit the people.
“You can see that already there are places where they are selling fuel at N1000 per litre,” he said. “Deregulation is that you are allowed to recover your cost, not to exploit the people. What the government has done is to give you a band, this is the highest price you can sell, if you choose, you can sell lower.”
He said inflation will obviously spike, but noted that that is not even the issue, “the issue is that we may soon have social breakdown because this is not the way to go, we all support the removal of fuel subsidy, but the government has not even engaged stakeholders, you need to have some basic agreements before you take such action.”
On his part, Professor Jonathan Aremu, an economist wondered why the government should still concern itself with the fixing of prices of fuel.
He asked, “Is it not longer total deregulation? What we heard at the inauguration was that subsidy has come to an end, if that is the case, let the people determine their selling price, let the importers go and import and sell at the market price.”
National President, All Farmers Association of Nigeria (AFAN), Arc. Kabir Ibrahim said this new price template portends a serious turbulence in food prices because most of the urban places depend on the rural areas for their food supply.
According to him, “Food come to them from the rural areas, if the price of transporting the food to the urban areas is high, certainly the sellers will transfer the cost to the consumers and that will worsen the food inflation.”
He however blamed the weak purchasing power of the naira for the challenges of inflation. “But I am glad the new President mentioned that he is going to do something about the monetary policy to see how they will strengthen the currency. Once the purchasing power of the naira improves, things will normalize.”