An economic expert and former Finance Commissioner of Imo State, Prof Uche Uwaleke, has described Nigeria’s rising inflation amid poor economic activities as very worrisome.
Nigeria’s inflation rate rose further to 12.82 per cent in July, the highest in 27 months, as food prices continued to surge.
The development was contained in the latest consumer price index (CPI) data released by the National Bureau of Statistics (NBS) on Monday.
According to Uwaleke, the development has morphed into stagflation, which further complicates monetary policy against the backdrop of forex market illiquidity and rising unemployment similar to the country’s experience during the 2016-2017 recession.
Uwaleke in a chat with Daily Sun, noted that the upward inflationary trend draws strength from commodity price increase, hike in Value Added Tax (VAT) and the pump price of fuel, border closure, COVID-19 impact on supply chains and insecurity in the food belt regions of Nigeria.
“It is also a reflection of the high Exchange rate. I think the best way to rein-in the rising inflation is for monetary and fiscal policies to synchronise in addressing the major inflation driver which is the food component that is in excess of 15 per cent”, he said.
On the fiscal wing, hesaid it was important that the government gets battle ready to end the incessant bandit attacks on farming communities, even if it means overhauling the entire security apparatus.
He reckoned that the Federal Government has since articulated a good massive agricultural programme in the Economic Sustainability Plan.
“The time for aggressive implementation is not tomorrow, not even today, but now!
“With respect to monetary policy, the rising inflation rate may compel the CBN to further tighten policy given its primary mandate of price stability.
“But this move may roll back any progress recorded in the area of stimulating economic growth.
“My advice to the MPC of the CBN is to continue to maintain status quo with regard to the policy parameters while focusing attention on how to improve liquidity in the forex market including through the ongoing unification of exchange rates.
“There is no doubt that the CBN has done a lot in pursuit of its developmental function to stimulate the growth of the Agriculture sector in particular.
“I am confident that in the coming months, the impact of these interventions, including the recent non-interest financing schemes for the agric value chain, will reflect on bountiful harvest and help moderate inflation rate”, he explained.
Nigeria’s inflation, worsened by last year’s border closure and the COVID-19 pandemic, has been on the upward trajectory for months, triggering a hike in prices of staple foods like rice, vegetable oil, processed foods and others.
In the latest report, the composite food index rose by 15.48 per cent in July compared to 15.18 per cent in June 2020.
