The Lagos Chamber of Commerce and Industry (LCCI) has called upon the Central Bank of Nigeria (CBN) to hit the brakes on interest rate hikes.
Dr. Chinyere Almona, Director-General of LCCI, emphasized the need for immediate action to alleviate supply-side pressures that are fueling inflation.
Addressing the recent inflation report, which revealed a staggering 25.80% inflation rate for August 2023, Dr. Almona cautioned that the rising inflation was primarily driven by increases in both food and core components of the Consumer Price Index (CPI). She stated, “The path of price movements remains unclear in the near term,” underlining the urgency of the situation.
Furthermore, LCCI’s statement anticipates that businesses will resort to various cost-cutting strategies, including staff downsizing and increased reliance on local sourcing of raw materials, to mitigate the impact of inflation on their operations.
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Dr. Almona’s statement was not limited to businesses alone; it also addressed the plight of households, predicting a continued decline in real income, especially in the short term.
She emphasized the importance of prudent fiscal policies and immediate measures to combat food inflation, such as reducing and eliminating taxes on basic food items to protect the most vulnerable.
In addition to these calls for action, the LCCI has urged the Nigerian government to provide palliatives to cushion the effects of rising inflation on consumers. This multi-pronged approach aims to stabilize the economy in the face of growing inflationary pressures.
In August 2023, inflation surged to 25.80%, marking a 1.72% increase from the previous month’s 24.08%. Food and non-alcoholic beverages played a significant role in driving this inflation, contributing 13.36%, followed by housing, water, electricity, gas, and other fuels at 4.32%, and clothing and footwear at 1.97%.
Urban inflation rose to 27.69% year-on-year, reflecting a 6.73% increase compared to August 2022, while rural inflation stood at 24.10%, showing a 3.98% rise from the previous year.
This latest plea from the LCCI follows the Central Bank of Nigeria’s decision just two months ago to raise the benchmark interest rate to 18.75%, the highest it has been in 22 years.
The ball is now in the CBN’s court as it weighs the need for continued interest rate hikes against the pressing concerns of businesses and households grappling with the relentless tide of inflation.
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