EDITORIAL: The havoc of inflationary pressure


People are groaning because of the devastating inflationary pressure that is making it impossible for many to consume the minimum calories required for a healthy living.

Nigeria’s macroeconomic environment has become very harsh in its diminutive impact on the purchasing power at the disposal of the citizenry.

Many cannot also conveniently afford to transport themselves to their workplace or move around for routine activities.

Meanwhile, the price of other payment obligations for services such as house rents, school fees, utilities (including cable television), health and recreation services are rising.

This shows that the quality of life enjoyed by Nigerians is deteriorating as poverty becomes more pervasive and endemic.

According to official statistics, the November inflation rate was 14.89 percent and it is fast heading towards the 15 per cent mark.

Meanwhile, the Rural inflationary pressure is also climbing as the rate climbed to 12.28 percent in July even when the price of Premium Motor Spirit and electricity tariff had not been hiked. Prices are just rising freely.

This applies to production inputs (except labour), consumer durable, agricultural products as well as services.

This unfortunately is the case irrespective of the basket of goods one uses as a measure outside the standard yardstick.

A close look at the policy framework of the government shows that the recent surge in general price level is not unconnected with structural bottlenecks, fiscal and monetary policies, deregulation, and trade policies as well as inefficiency on the part of regulatory agencies.

The government has for too long paid lip service towards unbundling of the shackles of growth and development such as poor budgetary implementation on capital projects, outdated laws and a toxic business environment that constrain the economy.

This has indeed, slowed down economic growth and resulted in shortage of goods and services and their attendant impact on inflation.

The government seems to be heating up the system by keeping its spending open-ended even as it cries of inadequacy of revenue to finance its expenditure obligations.

The disconnect between recurrent account, capital account and public debt operations is certainly having a destabilising effect on public finance operations of the country.

This has given rise to fiscal domination that describes the aggregative impact of the uncoordinated expenditure activities of all the governments in our strange three-tier federal arrangement.

It also appears that the Central Bank is losing sight of its inflation-targeting monetary policy which has been on its front burner for more than two decades now.

This is certainly not what the nation needs now when virtually all the macroeconomic variables are in disarray.

Here, attention of CBN must be called to its Naira management policy especially as it affects the regimented devaluation and depreciation which impact heavily on the domestic and external value of the currency.

The external value requires attention considering that the Nigerian economy carries a monolithic production base and import orientation.

The gross loss in the value of Naira is having a horrible impact on the life of Nigerians as misery and hopelessness characterise the daily songs of the lower income strata and whatever is left of the middle class.

It must be pointed out also that the government policy on agriculture in general and rice production appears to suffer a backlash.

Whereas local production has increased appreciably the farmers and agricultural marketers are engaging in exploitative pricing practice.

They simply jack up their prices arbitrarily. This is particularly the case with respect to rice where the price of the local varieties is at par with the foreign brands.

The recent increase in the price of premium motor spirit and electricity tariff have surely added more salt to the injury.

These two products are directly tied to production and distribution of goods and services and as such raising their individual prices simply translates to increasing the price of everything that is bought and sold in the open and underground economies.

Unfortunately, all these are happening when the nominal income of the average citizen has either stagnated or declined as the minimum wage has not been paid by many states of the federation.

The same is characterised by controversy in those states and some federal agencies that have implemented the new salary regime.

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The government must, therefore, demonstrate its commitment to enhance welfare of the citizens by taking all necessary steps to contain the surging inflationary pressure.

The Ministries of Finance and Budget and National Planning should work closely and harmonise their policies with that of CBN.

The Ministry of Agriculture and the requisite regulatory agencies should also take keen interest in the pricing of agricultural produce so that the staple food is not priced beyond the reach of the poor.

About the author

Ada Ada

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