By Onome Amuge.
The Manufacturers Association of Nigeria (MAN) said the current inflationary trend is adversely affecting the operations of the manufacturing sector and requires urgent implementation of government policies to address constraints on the manufacturing industry.
This is as Nigeria’s inflation rate rose for the seventh straight month in the year to 24.08 per cent in July 2023,representing an increase of 1.29 percentage points from 22.79 per cent recorded in June 2023, its highest in 18 years.
According to the latest inflation report by the National Bureau of Statistics (NBS),which measured the rate of changes in prices of goods and services, the headline inflation rate stood at 4.44 percentage points higher compared to 19.64 per cent recorded in the corresponding period of July 2022.
The NBS disclosed that the contributions of items on the divisional level led to the increase in the headline index including food & non-alcoholic beverages which rose 12.47 per cent; housing, water, electricity, gas & other fuel which increased 4.03 per cent; clothing & footwear which were up 1.84 per cent; transport which increased 1.57 per cent; 1.21 per cent increase in the cost of furnishings, household equipment & maintenance;while the education index surged to 0.95 per cent.
There was also percentage increases in other components of the the divisional level as health rose to 0.72 per cent; miscellaneous goods & services rose to 0.40 per cent rate from the previous month; while restaurant & hotels; alcoholic beverage, tobacco & kola ; recreation & culture ,recorded month-on-month increases of 0.29 per cent,0.26 per cent, 0.17 per cent, respectively.Also, the communication divisional level rose to 0.16 per cent.
Commenting on the soaring inflation figure, Segun Ajayi-Kadir, director-general of MAN, explained that elevated inflation served as a significant sign of underlying macroeconomic weaknesses the authority has neglected.
According to Ajayi-Kadir, the increase has led to a rise in the cost of production, higher costs of raw materials, labour and other production inputs and reduced profit margin leaving manufacturers to pass on higher costs to consumers in the form of higher prices.
The MAN DG pointed out that It appears evident that the continuing inflationary pressure experienced in the country is attributable to the fallout of recent government policy and measures, including removal of fuel subsidy and the unification of exchange rates. He noted further that concerns about increasing energy costs and widespread insecurity in food-producing regions are exacerbating the inflationary pressures.
In light of this, he highlighted the importance of addressing inflation as a complex and long-term endeavor that requires a coordinated effort from various stakeholders, including the government, central bank, private sector, and civil society.
For the country to witness sustained economic growth, MAN recommended a stable exchange rate, which is crucial to controlling inflation.
The CBN was also urged to implement effective exchange rate policies that prevent sharp depreciation of the currency, which has continued to lead to imported inflation.
Ajayi-Kadir also called for other effective measures against inflationary pressure including employment of collaborative fiscal policy measure through budgeting and effective taxation to complement the monetary policy actions taken by CBN; increased targeted support to the agricultural sector to enhance productivity; reduced reliance on imports and stabilisation of food prices; formulation of policies that promote a stable and conducive business environment; effective communication with the public and stakeholders about the government’s commitment to controlling inflation; addressing the challenges of insecurity; and implementation of structural reforms that enhance transparency, reduce bureaucracy and improve the ease of doing business.
