An Economist, Dr Muda Yusuf, has attributed the marginal spike and reversal of the deceleration trend in headline inflation to the surge in demand during Yuletide festivities.
Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), made the assertion in Lagos on Monday.
The inflation figure for December 2021, according to the National Bureau of Statistics (NBS), was pegged at 15.63 per cent, which translates to 0.13 per cent increase from November.
Yusuf said that the steady deceleration in headline inflation for eight months was brought to a halt with the marginal spike in the December 2021 headline inflation.
He noted other major drivers of inflation as, exchange rate depreciation, liquidity challenges, security concerns, climate change, high transportation, energy, import duty costs and monetisation of fiscal deficit.
He, however, stressed that inflationary pressures remained significant macroeconomic risk to the Nigerian economy.
He said that the development also, largely, reflected the impact of currency depreciation and the liquidity challenges in the foreign exchange market.
Yusuf, a former Director-General, Lagos Chamber of Commerce and Industry (LCCI), charged government to address the nation’s foreign exchange market volatility, security concerns and a host of other factors to tame its inflationary pressure.
“Although the economy witnessed an incremental deceleration in inflation over the past eight months, before the reversal in December, high inflationary pressures remain a major concern to stakeholders in the Nigeria economy.
“Some of the implications are escalation of production and operating costs for businesses, high food prices, weak purchasing power, and price volatility.
“To tame the current inflationary pressure, government needs to address forex liquidity issues, through appropriate policy measures and the country’s security concerns causing disruption to agricultural activities.
“They must also address high cost of productivity issues in the real sector of the economy and reduce fiscal deficit financing by the apex bank to minimise incidence of high-powered money in the economy,” he said.
He added that climate change consequences must be managed to reduce flooding and desertification, just as he called for the restoration of normalcy to the nation’s ports to reduce transaction costs.