NECA DG Timothy Olawale speaks on rising prices of consumer goods
NECA DG Timothy Olawale speaks on rising prices of consumer goods
The Director-General of Nigeria Employers’ Consultative Association (NECA), Dr. Timothy Olawale , has traced the rising prices of consumer goods in the country to persistent insecurity, long-term structural deficiencies affecting the logistics of movement of goods, COVID-19, among others, and called for urgent measures to address the problems.
Dr. Olawale who spoke to the Oracle New on Saturday also said that the unbridled demand for foreign currency, particularly the dollar, combined with the use of local currency to satisfy the desire for imported goods and services puts constant pressure on the nation’s foreign reserves, a situation that instigates inflation.
Said NECA DG: “Additionally, persistent insecurity across the country, long-term structural deficiencies affecting the logistics of moving foods in urban areas such as poor road networks and epileptic power supply, the long-term impact of COVID-19-induced supply disruptions, increases in electricity tariffs, dwindling capital flows, depletion of foreign reserves, and a slew of structural issues are the root causes of rising food prices.
“Despite the fact that Nigeria’s inflation rate fell to 17.75 per cent in June 2021 from 17.93 per cent the previous month (May 2021), marking the third consecutive month of decline in headline inflation, it is important to note that there has been little or no significant drop in the prices of goods and services, particularly consumables.”
According to him, “food inflation was 21.83 per cent in June 2021, down from 22.28 per cent in May 2021, according to the National Bureau of Statistics (NBS), while core inflation, which excludes volatile agricultural produce prices, fell from 13.15 per cent in May 2021 to 13.09 per cent in the review period.
“The primary cause of the rise in the cost of products and services is not difficult to guess.”
Dr. Olawale said historically, changes in food prices have been the primary drivers of inflation, and the NBS report confirms that Nigerian inflation has been on an increasing track for 20 months, from August 2019 to April 2021, when the downward trend began.
The increased trend was primarily due to food inflation, which was exacerbated by a temporary border closure in August 2020.
Additionally, persistent insecurity across the country, long-term structural deficiencies affecting the logistics of moving foods in urban areas such as poor road networks and epileptic power supply, the long-term impact of COVID-19-induced supply disruptions, increases in electricity tariffs, dwindling capital flows, depletion of foreign reserves, and a slew of structural issues are the root causes of rising food prices.
Economically, there is a positive relationship between the exchange rate and inflation, and because the country’s exchange rate has continued to deteriorate, inflation is expected to worsen.
The unbridled demand for foreign currency, particularly the dollar, combined with the use of local currency to satisfy the desire for imported goods and services puts constant pressure on the nation’s foreign reserves.
To address these problems, Dr. Olawale advised that Nigeria must start looking inwards, investing its resources in designing and funding a green transition strategy and others to return the economy to the path of sustainable growth.
“There is an urgent need for emergency plans to expand the economy and address the aforementioned structural issues,” he said.
