Already, the 2021 budget projected an inflation rate of 11.95 per cent by December, which partly reflects on the rising prices of commodities in Nigeria.
Everyevery.ng, while perusing a write-up by Professor Uche Uwaleke, an expert in economic matters, highlighted five factors responsible for incessant inflation rates.
Uwaleke, a former Imo State Commissioner for Finance and the National President of Capital Market Academics of Nigeria, hinted that the unstable prices present grave implications for capital flows, exchange rates, and in extension, uncontrollable inflation rates in Nigeria.
Yesterday, he explained that the rising global demands of commodities might also create concerns in a period when the Covid-19 Delta Variant is widely affecting economic activities worldwide.
5 Factors increasing Prices of Commodities in Nigeria
In the expert’s essay themed, “Near-Term Inflation Outlook: Bleak Prognosis,” he mentioned several factors likely to bring about a rise in prices of commodities in Nigeria for July.
- Professor Uche Uwaleke said Nigeria would encounter a spike in the inflation ratio from the backdrop of an ‘Increased Demand’ activity witnessed during festivities.
- The expert hinted that another core factor impacting inflation is the overwhelming consequences of flooding in various parts of Nigeria.
- The harmful legacy of continuous challenges of insecurity, high cost of fuel and electricity, transportation hiccups, among other setbacks, mar the nation’s economy.
- The former commissioner also cited the N733 billion increased Federation Account Allocation Committee, FAAC, June distribution to the different tiers of government and high exchange rate. He suggested discouraging the issuance of this fund, adding that an increase in government borrowing threshold by the Debt Management Office, DMO, from twenty-five to forty per cent, is an area that should bring a concern to the country’s economic performance.
- Another notable mention here is the limitations contained in the Petroleum Industry Bill, PIB. Prof. Uwaleke stated that the passage of the Bill and the consent of the National Economic Council, NEC, provided for total deregulation of the downstream sector.
He noted that the government should welcome suggestions of the Organisation of Petroleum Exporting Countries, OPEC, as its ministers agreed to increase oil supply in August and the new output quota.