Inflation: Fuel price, FX liable for high cost of goods –Experts

As Nigerians grapple with the escalating cost of living amid widespread discontent in the country, experts have said that the fallen value of the Naira and high fuel price are driving Nigeria’s inflation. PAUL OGBUOKIRI reports

PMS price hike and price of goods in the market

With the recent increase in the price of petrol and further devaluation of the Naira, the Federal Competition and Consumer Protection Commission (FCCPC) which is taking steps to moderate the price of goods in the market, has a very tough assignment as prices of goods and services, according to experts are set to go haywire and make life unlivable in Nigeria. They said despite claims of ‘cartels’ fixing prices, that it would be difficult for FCCPC to determine the appropriate price of goods in the market with unstable foreign exchange rate and astronomical rise in the price of petrol, including the 250 per cent increase in electricity tariff. Recall that the FCCPC had in its reaction to the high cost of goods in the market, alleged that some traders, who are forming cartels in markets across the country were behind the astronomical increase in prices of food items. The Chief Executive Officer of the Commission, Mr. Tunji Bello, stated this recently in Lagos, while addressing leaders of market associations, transport operators, and service providers at a town hall meeting hosted by the FCCPC. While acknowledging that the exchange rate and the increase in petrol price make the old prices unsustainable, Bello frowned at disproportionate increases in the prices of food items, which he said are often perpetrated by “cartels” to exploit consumers. But experts say the 50 per cent increase in the price of petrol last week has rippled through the economy, driving up prices of essential goods and services, and exacerbating financial hardships for many Nigerians. They further said that FCCPC intervention at this time will have little impact as it does not have the powers to drive down the price of petrol, stop the fall of Naira value and bring the high electricity tariff down. Those, according to them, were the drivers of Nigeria’s hyper inflation.

FX rate hits N1, 629/$ as CBN sells $20,000 to BDCs

As the Central Bank of Nigeria (CBN) announced the sale of $20,000 each to eligible Bureau De Change (BDCs) at the rate of N1, 580/$, the official exchange rate hit N1, 629.64/$ on Thursday. However, the official rate of the Naira on Thursday was N1, 629.64 to a Dollar. This is according to a statement issued by Dr Williams Kanaya, the Acting Director, Trade and Exchange Department of the Central Bank. “This is to inform the BDC operators and the general public that we are providing more liquidity into the market. “To this end, the CBN has approved the sale of $20,000 to each eligible BDC operator at the rate of N1, 580/Dollar. This is to meet the demand for invisible transactions. “All BDCs are allowed to sell to eligible end-users at a margin not more than one per cent above the purchase rate from CBN,” the statement added.

Despite denials, NNPCL petrol pump price sticks

Just as Nigerians were rejoicing that the $20 billion, 650,000-barrels-per-day Dangote Refinery was set to finally roll out Premium Motor Spirit (PMS), news filtered through that the Nigerian National Petroleum Company Limited (NNPCL) had increased the pump price of Premium Motor Spirit (PMS), commonly known as petrol from N568 to N855, N897 (depending on the location per litre) amid lingering fuel scarcity and the country’s crisis. While a report from Abuja said the price was jerked up to N897 per litre, our correspondent in Lagos said NNPC stations in Lagos increased the price to N855 per litre. Independent marketers have adjusted their prices to between N930 and N1,200 per litre of petrol. This is as a Sunday Telegraph investigation revealed that the product is already selling at between N1, 400 and N1,500 a litre in the Eastern part of the country and some parts of northern Nigeria. Reports on the newly increased price came after NNPCL said it owed its suppliers more than $6 billion in debt. Speculations revealed the price was reviewed upward to reflect the global price and to reduce the debt burden on NNPC Ltd. The NNPC Ltd’s spokesperson, Femi Soneye, denied any adjustments in prices, stressing that the old price remained. But that denial neither changed the NNPC Ltd’s price hike by its retail outlets or the independent marketers’ stations. The Federal Government had earlier denied that it directed fixing of the pump price of petrol at N1,000. “The Federal Government is compelled to address the outright falsehoods currently being circulated on social media, which claim that the Minister of Petroleum Resources (Oil), Senator Heineken Lokpobiri, has directed the Nigerian National Petroleum Company Limited to inflate petroleum prices above the approved pump price,” said a statement by Nnemaka Okafor, special adviser, media and communication, to the Minister for Petroleum Resources (Oil), Heineken Lokpobiri.

Transport fares surge 50% nationwide

The latest hike in the price of petrol has pushed up transport fares by over 50 per cent in major cities across Nigeria. The newest price hikes, implemented by the NNPC Ltd Retail Management, has a widespread impact, with some Nigerians resorting to long-distance trekking and others missing work due to the higher transportation costs. This is as commuters in Lagos and Edo states on Thursday expressed frustration over the hike in the price of petrol, saying it has constrained their living conditions. Many of them, who spoke to our correspondents, said the unaffordability of transportation cost had forced them to trek to work. Some Lagos residents, who spoke to Sunday Telegraph, described the current fuel situation in Nigeria as biting, saying that it had affected the cost of transportation. A businesswoman, Beatrice Okonkwo, said that the increase had become frustrating to low income earners. “Today, I stepped out to get to my child’s school, and I noticed an increase in transport fare. “From Gate to Cele Bus Stop, which used to be N200, is now N300, and from Ijesha to Yaba, which was N200 by tricycle, is now N400. “Drivers are even saying that they would further increase the fares to be able to recoup money they spent on fueling,” she said. She appealed to the Federal Government to do more to alleviate the sufferings of the citizens. A civil servant, who wants to be identified simply as Odibo, urged the government to address the fuel situation urgently. According to Odibo, transport fare from Ipaja to Costain through Oshodi has increased from N1, 000 to N1, 700. Odibo regretted that workers were facing the increase although they had yet to be paid the new minimum wage. “Government should listen to our cries,” Odibo said. A frozen food trader and mother of two, Mrs. Arinola Olusoji, said: “I’m finding it difficult to balance my budget. The increase in petrol prices has added to my transportation costs, and I’m struggling to afford necessities like food and rent.”

Inflation figures may go up, businesses wind down

Reacting to the latest petrol price hike, the Manufacturers Association of Nigeria (MAN) said that the new price of petrol might push inflation figures higher, impacting household budgets. It also said Small and Medium-scale Enterprises (SMEs), which often operate on thin margins, could be hard hit by the development. MAN, in a recent statement by its Director-General, Segun Ajayi-Kadir, enumerated the impacts of the petrol price hike. “So, in terms of what the impact might be and judging from what we have witnessed in the past, the cost of transportation may increase, and so would the prices of goods and services. As the cost of petrol rises, consumers will spend more on transportation and energy, leaving them with less disposable income. “This decrease in purchasing power may lead to reduced demand for nonessential goods and services, affecting businesses across various sectors. These are pointers to the high possibility of a rise in inflation figures, impacting household budgets,” the DG said. Also speaking, Managing Director/ Chief Executive Officer of Treasury Capital and Trust Limited, Mr. Tom Achoda, said that the implications of the latest hike in the pump price of petrol and high inflationary pressure for businesses would be very significant and negative. Achoda, who is also an economist, said that their impacts may further erode the value of the Naira and reduce the purchasing power of individual consumers. He projected that businesses were going to shut down and those that would be running, would be running at negatives, which would lead to an increase in nonperforming loans (NPLs). TUC asks govt to rescind decision The Trade Union Congress of Nigeria (TUC) has criticized the Federal Government for the recent hike in the pump price of petrol, demanding its immediate reversal. TUC President, Festus Osifo, in a statement, said the union expressed deep concern that the sudden increase in fuel and electricity costs would exacerbate poverty levels, worsen the suffering of citizens and potentially lead to social unrest. Osifo criticized the government for implementing the price increase without consulting key stakeholders, calling it a blatant disregard for the welfare of the Nigerian people, particularly the working class, who are most affected by such decisions. “The news of the PMS price hike has sent a wave of apprehension and depression across the nation, especially as it comes on top of existing hardships faced by citizens,” he said. He said the TUC was also concerned about the recent 250 per cent increase in electricity tariffs, labelling it as an additional burden on the poorest in society and a sign of the government’s lack of empathy for ordinary Nigerians. Tinubu didn’t bargain fuel price for minimum wage-Presidency The Senior Special Assistant to the President of Media (Print), Abdulaziz Abdulaziz, last Wednesday on his X handle, said Tinubu never bargained with the leadership of the Nigerian Labour Congress (NLC) not to increase the price of petrol before arriving at N70, 000 as the new minimum wage. He was reacting to the allegation by the NLC President, Joe Ajaero, that Tinubu asked them to accept N70, 000 as minimum wage for the petrol price to remain N617/litre.