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HomeBusinessNigeria’s Inflation Climbs to 33.95% in May: Analysts Call for Urgent Economic...

Nigeria’s Inflation Climbs to 33.95% in May: Analysts Call for Urgent Economic Interventions

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Nigeria’s inflation rate surged to 33.95% in May, up from 33.69% in April, according to the latest Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS).

This uptick has led analysts to urge the federal government to take immediate actions to stabilize the economy, including boosting the supply of foreign exchange (FX) and addressing the rising cost of petroleum products.

The NBS report attributes the 0.26% increase in the headline index primarily to escalating energy, food, and commodity prices. Year-on-year, inflation is now 11.54% higher than the 22.41% recorded in May 2023.

Food inflation reached 40.66% in May, a significant increase from the previous year’s 24.82%. Key contributors to this rise include staples such as semovita, yam flour, palm oil, and various meats and fish.

At the state level, Bauchi recorded the highest year-on-year inflation at 42.30%, followed by Kogi at 39.38%, and Oyo at 37.73%. Conversely, Borno, Benue, and Delta states experienced the slowest rises, with inflation rates of 25.97%, 27.74%, and 28.67%, respectively. Month-on-month, Kano, Gombe, and Bauchi saw the highest increases, while Ondo, Kwara, and Yobe recorded the slowest.

Economic experts are advocating for a multifaceted approach to tackle the rising inflation. Dr. Chijioke Ekechukwu, Managing Director of Dignity Finance and Investment Limited, highlighted the negative impact of the high Monetary Policy Rate (MPR), which has driven lending rates up to 35%. He noted that this situation burdens consumers with higher prices for goods and services, as businesses pass on the increased costs of bank credit.

Ekechukwu emphasized that ongoing issues such as FX scarcity, high petroleum prices, and inadequate power supply are exacerbating inflation. He also pointed to the persistent insecurity affecting agricultural output, leading to sustained high food inflation.

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Similarly, Idakolo Gbolade, Managing Director of SD&D Capital Management Limited, urged the Central Bank of Nigeria (CBN) to revise its inflation-taming strategies.

He argued that the continuous hikes in the MPR are detrimental to business operations and lead to significant losses. Gbolade called for improved fiscal policies to support ease of doing business and the prompt implementation of single-digit interest rate loans for SMEs and large-scale companies.

The CEO of the Centre for the Promotion of Private Enterprises (CPPE), Muda Yusuf stressed the need for addressing supply-side issues such as the depreciating exchange rate, rising transportation costs, and logistics challenges.

He advocated for government interventions to boost production and productivity, including concessionary import duties for industrialists and support for the logistics sector.

Despite the challenges, there are some positive signs. Boniface Chizea, CEO of BIC Consultancy Services, noted the declining month-on-month inflation figures as a positive trend. He attributed this to fiscal interventions, including the removal of tariffs on some imported goods, which have helped mitigate price increases.

Chizea emphasized the importance of a stable foreign exchange rate, which would allow businesses to plan more effectively. He expressed optimism that the combination of fiscal and monetary policies is beginning to show results, but stressed the need for continued government action to maintain this positive momentum.

With Nigeria’s inflation rate at a troubling 33.95%, there is a consensus among analysts that immediate and coordinated economic measures are crucial. Addressing FX supply issues, stabilizing petroleum prices, and enhancing fiscal discipline are seen as essential steps to alleviate the burden on consumers and ensure sustainable economic growth.

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