A tough festive season lies ahead for Nigerians as the country’s headline and food inflation rates worsened under President Bola Ahmed Tinubu’s administration.
Economists and financial analysts believe the government’s interventions to tame inflation are not enough, the reason it has continued to rise, hitting 34.60 percent in November.
They also believe the Federal Government’s announcement of a free train ride for commuters this festive period will not have a meaningful impact.
Prof. Segun Ajibola, former President and Chairman of the Council of Chartered Institute of Bankers, and Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, disclosed this exclusively in separate interviews with DAILY POST on Monday.
This comes as the National Bureau of Statistics on Monday announced that Nigeria’s inflation further rose by 0.72 percent on a month-on-month basis to 34.60 percent in November.
At the same time, food inflation skyrocketed to 39.93 percent in November from 39.19 percent.
The report showed that headline and food inflation have increased significantly by 6.4 percent and 7.09 percent from 28.20 percent and 32.84 percent in the same period last year.
The report showed that rising energy and transportation costs had heavily impacted the country’s inflation rise.
The latest inflation figure came at the time the federal government announced two weeks of free train service for Nigerians.
The Minister of Information and National Orientation, Mohammed Idris, disclosed this while briefing journalists after Monday’s Federal Executive Council meeting, noting the intervention is part of efforts to cushion the impact of high transportation in Nigeria.
Reacting, Prof. Segun Ajibola told DAILY POST that the free train services and monetary interventions by the Central Bank of Nigeria will not and have not made any meaningful impact to tame inflation.
On November’s inflation rate, the Don said that CBN and indeed the Nigerian government are applying wrong directives.
According to him, the solutions to Nigeria’s worsening inflation lie more in fiscal measures.
“There is a wrong diagnosis of the inflationary problem in Nigeria. CBN is, therefore, applying wrong prescriptions.
“Solutions lie more in fiscal measures, not contractionary monetary stance, which has not and will not stem the inflationary pressure in Nigeria.
“Let the fiscal authorities brace up, combat production cost-induced challenges, and make the ease of doing business easier among the multidimensional problems confronting businesses in the country,” he said.
He noted that the worsening inflationary pressure means that the purchasing power of Nigerians will further decline in the coming festive season.
“Badly, purchasing power further eroded. But the government is trying to help. Free train services just announced,” he added.
When asked about the impact of the free train service, he said, “Nothing meaningful. I am sure less than 1 percent of the Nigerian population has access to train services.
“More fiscal retooling, less inappropriate jerking up of rates across the board by CBN,” he told DAILY POST.
On his part, Muda Yusuf, the director of the Centre for the Promotion of Private Enterprise (CPPE), said monetary interventions to tame inflation have not been as effective as expected.
According to him, the government needs to focus on fiscal responses to inflation, such as a more robust transportation subsidy, tax waivers, and other fiscal policies capable of bringing down inflation.
“The persistent inflation pressures have been reflected in the country’s latest figure in November, which is generally very worrisome and disturbing.
“This is because the major challenge the ordinary citizens face is that of inflation and its impact on welfare and purchasing power.
“Of course, there have been measures to tame inflation, especially from the monetary side, which, from all indications, have not been as effective as expected.
“So what we can help with is for us to have more positive responses from the fiscal side to bring down the cost of production and transportation through the use of fiscal policy tools such as taxation, tariff waivers, and, of course, reduction in public expenditure in a way to ease the pressure in production and transportation costs.
“What is happening to inflation shows the limitations of monetary policy in handling the development.
“Unless there are combined efforts of monetary and fiscal policies, I cannot, and we can achieve much to tame inflation.
“I am hoping steps will be taken near time to bring down energy costs in the exchange rate, address insecurity issues that have been affecting our agricultural products, and also improve public transportation,” he stated.
Speaking on the free train service by the federal government, he lauded the initiative.
However, he called for a robust intervention across sectors, including education, health, and agriculture.
“It is good. It is a kind of subsidy that we clamour for, but we want to see a sustainable subsidy, not a one-off.
“All over the world, there is government-subsidised transportation. Also, in agriculture, health, and education, all this brings succour to the average Nigerian. Right now, the average Nigerian has to struggle to pay for school fees, medication, transportation, and energy.
“There are so many pressures from multiple sources; there is a need for a lot of subsidy, not like that of fuel that is abused. There are some subsidies that can effectively target and bring about lasting succor.
“I will use the free train service, but I would like to see something that is broader and more permanent to ease the burden of the cost of transportation. This is a responsibility of all tiers of governments,” he told DAILY POST.
DAILY POST reports that the Central Bank of Nigeria, led by Olayemi Cardoso, in the past months has consistently increased interest rates with rising inflation as justification.
The latest hike was in November when the CBN 297th Monetary Policy Committee decided to raise the country’s interest rate to 27.50 percent from 27.25 percent.
Tough festive season awaits Nigerians amid untamed inflation spike