High Inflation Level Dampens Purchasing Power – LCCI

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Nigeria’s moderated headline inflation rate stood at 18.12 percent, according to the Nigeria Bureau of Statistics (NBS), a situation that would negatively impact the purchasing power of consumers, as described by the Lagos Chamber of Commerce and Industry (LCCI).

In an interview with the News Agency of Nigeria (NAN), LCCI’s Director-General, Muda Yusuf, said that the inflation figure continued to impact every sector of the country’s economy.

Muda said that despite the marginal moderation in food prices, food inflation remained high at 22 percent, affecting households, businesses, and investors.

He said, “The Lagos Chamber of Commerce and Industry notes the marginal moderation (year-on-year) in headline inflation as domestic prices accelerated by 18.12 per cent in April 2021 compared to 18.17 per cent reported in the previous month.

“This is the first time the economy would witness a moderation in consumer prices since August 2019 when the Federal Government shut the land borders.

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“The chamber notes the slight moderation in food prices on a year-on-year basis in April 2021 (22.72%) compared to 22.95 per cent reported in March 2021.

“However, food inflation at over 22 per cent is still very high in spite of the marginal moderation in food prices in April 2021.

“The situation has continued to impact the activities of every economic agent, including households, businesses and investors with profound impact on the citizenry, particularly the low and middle-income households.

“The high level of inflation continues to dampen consumer purchasing power at a time households income are not increasing in proportion to cost.

“High inflation environment also impact businesses in terms of rising production costs and depressed margins, making it increasingly difficult for corporates to deliver impressive returns to shareholders.

“This has implications for the sustainability of investment.

“Tightening policy stance by raising the monetary policy rate would naturally have implications for interest rates across key segments of the financial market.

“Overall, we believe effective synchronisation of fiscal and monetary policies is crucial in the fight against high inflation.”

In a recent report, the NBS stated that the inflation rate recorded a marginal drop to 18.12 percent from 18.17 percent in April.

The report noted, “The urban inflation rate increased by 18.68 percent (year-on-year) in April 2021, down by 0.61 the rate recorded in March 2021(1.60), while the rural index also rose by 0.95 percent in August, down by 0.57, the rate recorded in March 2021 (1.52 percent).”

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