2022 Appropriation Bill : How I see It.
The Latest Data on Inflation
By Dr. Boniface Chizea
The Bureau of Statistics release indicating that the rate of inflation rose marginally from 15.6 to 15.7 per cent form last month is a bit surprising to say the least. One will not want to impungn the integrity of the Body as we believe it has burnished its credentials as a thoroughly professional Body in the past. We might also not be privy to its methodology of calculations, but what is not incontrovertible is that the price system in the economy seems to have fallen apart. There is no aspect of life that has not today witnessed ravaging run away price rise!
At the Ikoyi Club 1938 this last Friday in the evening a friend of ours celebrated his Diamond Jubilee; sixty years. And after I spoke to felicitate with him, I donated two cartons of beer in support of the celebrations. When it was time to pay I was taken aback as the cost was 9.5k. The last time I gave this sort of support, I paid an amount in the region of 6k! Therefore there has been an increase of at least 50%! You could replacate this observation across board.
The price of diesel is now over 650 Naira and what is alarming is that the price is galloping every day. The sort of experience you have in an environment which is under hyper inflation. Only last week it was in the region of 500 Naira a litre. Could you imagine how economic agents that depend on diesel survive! It is impossible!
The airline operators recently gave notice that the planes will be grounded as it is not possible to fly at the current rate of speedily increasing price levels of aviation fuel. A truce has just been announced with the price fixed at 500 Naira per litre. The operators hinted that they could have been more comfortable with the price level of 200 Naira. The stop gap agreement is for only three days to keep the planes in the air with the provisions that the airline operators might be allowed to directly import aviation fuel.
The power situation has collapsed and there is no electricity in most urban centres in the country. The explanation is the fact that the Generation Companies claimed that they are being owed humongous amounts of money which meant that they are massively indebted to the gas generating companies. There is on going altercation with the Bulk Electricity purchasing Company disputing the claims by the Generating Companies.
We have not taken into account the impact on inflation of the falling rate of exchange which must be severe. There is short supply of foreign exchange from official sources and its common knowledge that the arbitrage opportunity between alternative sources and the official source is a damaging not supportable 50%!
Therefore it is very difficult to reconcile the marginal increase in rate of inflation month on month that has just been reported. What is worrisome is that some otherwise reputable companies that track economic activities surprisingly predicted a further drop in the rate of inflation against the scenario which we have just painted! Probably the recent price increase across board is still working through the system for its impact to be fully felt subsequently.
So, what we are trying to do now is to serve notice to put everyone on the alert! The Nigeria Bureau of Statistics must struggle not to take Nigerians for granted otherwise its continued relevance which had so far been taken for granted will be discounted. And that would be a serious development as it has the potential to undermine its future amongst a generality of Nigerians even also amongst International stakeholders which will be too bad.
Dr. Boniface Chizea , is a top-notch economic and business development consultant
