The Central Bank of Nigeria should pause interest rate hikes to relieve the pressures on the supply side affecting inflation.
Businesses operating in Nigeria are also expected to adopt more cost-cutting strategies including downsizing staff count and also more local sourcing of raw materials to deal with the rising inflation.
This was disclosed in a statement by Dr Chinyere Almona, Director-General, LCCI, on Monday reacting to the recent inflation report of 25.80%.
The Lagos Chamber of Commerce and Industry urged the FG to implement prudent fiscal policy measures.
Cost cutting
The LCCI in its statement said it is anticipating that businesses will implement a variety of cost reduction strategies to lower operating expenses and maintain profitability amidst inflationary pressures, including downsizing and local sourcing of input factors to remain afloat.
Dr Almona also noted that households’ real income would continue to experience a decline, especially in the near term, citing the business lobby group is concerned about the uptick in inflation (year-on-year) driven by the increase in both the food and core components of the CPI and also the indication that the path of price movements remains unclear in the near term, she added:
- “The Lagos Chamber of Commerce and Industry recommends government implement prudent fiscal policy measures.
- “This is particularly in terms of borrowings as well as addressing the challenge of food inflation by immediately reducing and removing tax on basic food items to protect the most vulnerable.
Palliatives and Rate hike
The LCCI also called for palliatives to cushion the effect of the rising inflation on consumers, and also a pause in interest rate hikes.
- “We implore the government to hasten the provision of the anticipated palliatives to lessen the impact of the rising trend in prices on economic agents.
- “Furthermore, we urge the Central Bank of Nigeria (CBN) to pause interest rate hikes to relieve the pressures on the supply side, especially at this time,”.
Nairametrics reported that inflation surged to 25.80% in the month of August 2023, 1.72% points higher than the 24.08% recorded in the previous month.
In terms of contribution to the year-on-year inflation, Food and non-alcoholic beverages (13.36%) contributed the most, followed by housing water, electricity, gas and other fuel (4.32%), and clothing and footwear (1.97%).
On a year-on-year basis, in August 2023, the Urban inflation rate was 27.69%, this was 6.73% points higher compared to the 20.95% recorded in August 2022.
The Rural inflation rate stood at 24.10%, representing a 3.98% points increase compared to the 20.12% recorded in August 2022.
Meanwhile, 2 months ago, The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) increased the benchmark interest rate (MPR) by 25 basis points to 18.75% from its initial 18.5%, representing the highest interest rate in 22 years.