LCCI projects 17.24% inflation rate for February
The Lagos Chamber of Commerce and Industry (LCCI) has projected an increase within the range of one per cent in the Nigerian headline inflation index for February, 2021.
The LCCI made this known in a report titled: “Spiraling Inflation: Cost Implications for Businesses and the Economy” conducted by Dr Mathew Ojo, LCCI’s Assistant Director, Research and Advocacy department on Tuesday.
According to the report, a survey conducted by the Chamber projected the headline inflation for February to hit 17.24 per cent from 16.47 per cent recorded in January.
Also, the LCCI in the report said that consequent headline inflation for the months of March and April was pegged at 17.93 per cent and 18.43 per cent respectively going by the Chamber’s model on inflation rate projections.
The LCCI hinged its projections on the combination of underwhelming food production, higher energy costs, lingering foreign currency liquidity and heightened insecurity in major food-producing states.
This development, the LCCI said, would continue to mount pressure on consumer purchasing power and pricing.
The LCCI survey indicated additionally that the commencement of planting season in the second quarter was expected to keep food production subdued, thereby triggering food prices in the country.
The Chamber also explained that basic supply-side issues, particularly, the heightened insecurity around the country, but more pronounced in Northern and Middle-Belt region – the major food-producing regions in Nigeria were contributory factors.
Others, the report stated, were increasing cost of transporting food items from farms to markets as a result of elevated prices of petroleum products, weak productivity in the agriculture sector and increased cost of agricultural inputs.
“The COVID-19 pandemic propelled the Federal Government to impose lockdown and movement restrictions as part of the efforts in containing the spread of the deadly virus in 2020.
“However, the chamber noted that these policies caused disruptions to activities in the country’s agricultural sector as farmers were unable to access their farmlands, thereby leading to supply shortage of agricultural output.
“The unfortunate situation prevented farmers from taking advantage of the planting season to grow crops.
“Consequently, the increased demand for agricultural products amid food supply shortage triggered food costs, as supply disruptions were further worsened by flood incidences.
“Which in turn affected some parts of producing states, destroying crops shortly before the harvest period.
“Currently, reports of a transportation gap from the North to other parts of the country, especially the Southwest would also serve to spike up the inflation rates from the height it already is at,” the report read.
Shedding more light on the development, LCCI’s Director-General, Dr Muda Yusuf, said that the Northern region, which accounts for a major chunk of food production, was currently threatened by persistent security crisis.
This, he said, would greatly affect the food composite of the inflation index, a factor that greatly impacts the core inflation index.
Yusuf urged government to expend more efforts at addressing regional and ethnical discrepancies affecting the supply chain of farm produce from the northern parts to other regions of the country.
“The unabated rise in inflation has continued to impact the business environment with serious implications for economic stability.
“We may not have seen the end of the pressure on inflation as the current trends of boycott, heightened insecurity from bandits and herdsmen activities, confusion and attacks continue to beguile the major food producing parts of the country.
“We need to resolve these ethnical issues around the supply of food to resolve the challenges affecting agricultural outputs and food distribution.
“We also need to see a reduction in the prices of fertilisers, animal feeds and other agricultural components to moderate the current uptrend in Nigeria’s inflation rates,” he said.
