OPS: Inflation Rate Drop Misleading, Market Reality Defers

The Organized Private Sector has stated that Nigeria’s straight monthly decline in inflation rates contradicts the country’s existing economic realities.

On Monday, the National Bureau of Statistics (NBS) announced in its Consumer Price Index report that “In August 2024, the headline inflation rate further eased to 32.15 percent relative to the July 2024 headline inflation rate of 33.40 percent.” The report added, 

“Looking at the movement, the August 2024 headline inflation rate showed a decrease of 1.25 percentage points when compared to the July 2024 headline inflation rate.”

Despite the drop, the Organized Private Sector (OPS) regarded this development as unusual, considering the high cost of commodities and the rise in petrol prices across Nigeria. According to the NBS, the inflation rate had fallen in both July and August 2024.

Dele Oye, President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), questioned the bureau’s report, stating that the claim of a drop in the inflation rate to 32.15 percent in August 2024 did not reflect the economic challenges businesses and consumers were facing.

“As the umbrella body representing the Nigerian private sector of all the chambers of commerce, NACCIMA finds the NBS figures to be grossly at odds with the escalating cost of living and doing business that our members and the general public are grappling with daily.”

Oye pointed out that contrary to the NBS report, “the prices of goods and services have not only doubled but in many cases tripled, driven primarily by the astronomical increase in the cost of petroleum products, a key input for transportation, logistics, and production across various industries.”

He cited the Nigeria National Petroleum Company Limited’s statement that petrol from the Dangote refinery would be sold for over N1,000 per liter in the far north as evidence of supply shortages and skyrocketing fuel prices.

Oye added that the rise in fuel prices had triggered a domino effect, causing transportation fares, food, manufactured products, and other commodities to spiral out of control.

“If we relate this to the report where petrol was scarce and most people had to buy fuel from non-conventional sources (black market), over and above NNPC’s current increased official prices, the effect on August inflation ought to be higher than as currently projected by the NBS.”

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He further criticized the Central Bank of Nigeria’s monetary tightening policies, including hikes in the Monetary Policy Rate, which have failed to curb inflation. Oye emphasized that the NBS’s data, which showed a continuous decline in inflation over two months, raised doubts about the credibility of their methods. 

NACCIMA urged the agency to review its data collection and analysis processes to provide a more accurate reflection of the economic situation.

“As the voice of the Nigerian private sector, we call on the government to urgently address the underlying structural and supply-side issues driving the soaring inflation, rather than relying on questionable statistics that do not align with the lived experiences of businesses and citizens,” Oye said. 

He added that only an evidence-based approach to tackling inflation would restore confidence in the economy and create an enabling environment for businesses to thrive.

Similarly, Dr. Femi Egbesola, National President of the Association of Small Business Owners of Nigeria, expressed skepticism about the reported inflation decrease, stating that it contradicted the economic reality. 

“Prices of goods and commodities keep climbing up, and another big push of inflation this time again is the incidental increase in petrol pump price. One begins to wonder where this reported decrease in the inflation rate is coming from,” he said.

Egbesola also echoed concerns about interest rate hikes, noting that the World Bank predicted they would not control inflation in Nigeria.

However, Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry (LCCI), stated that the inflation rate figures were expected, as the sharp rise in PMS prices occurred in September.

“A small decline is beginning to show because we are almost reaching the peak of inflation in Nigeria. We are slowly coming down,” he explained. Idahosa added, 

“the price range (of PMS) we are seeing now from N900 to N1,000 was not predominant in August.”

Idahosa noted that while a decline in inflation started in August, it was difficult to expect this trend to continue through the rest of 2024, given the persistent pressures from key inflation drivers like petroleum, exchange rates, and food availability. petroleum, exchange rate, and food, among others.

“It is difficult to expect that the decline of inflation that started in August will happen for the second half of this year. But we have to look at the fundamental drivers of inflation.

“It is difficult to expect that the decline of inflation that started in August will happen for the second half of this year. But we have to look at the fundamental drivers of inflation.

“One is oil, two is the exchange rate, and three is food, availability, and driving. Out of those three variables, the exchange rate has moved a little bit. All goods in Nigeria were already being tried in that range of N2,000, N3,000, etc.,” he stated. 

In the meantime, the Lagos State Environmental Protection Agency (LASEPA) and the Lagos State Parks and Garden Agency recently partnered to host a day-long boot camp, tagged ‘Eco Explorers Bootcamp,’ aimed at educating children about environmental protection.

The event, held at the Dr. Oluyomi Abayomi Finnih Park by Opebi Link Bridge, Lagos, sought to inspire kids to connect with and cherish the natural world while teaching them sustainable environmental practices.