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Ugo Aliogo and Shalom Uzochukwu
With the continued weakening of the naira and the knock on effect on other areas of the economy, the Chief Commercial Officer, Prosperis Holdings, Mr. Efe Shaire, has expressed concerns over the continued double-digit inflation, noting that the trend is not likely to change in the remaining period of the year.
Shaire, who disclosed this yesterday in an interview with THISDAY, said it is expedient to clarify that it is the year-on-year inflation rate that dropped by 0.38% (from 17.01% to 16.63%) while the month-on-month index actually increased further by 1.15%, “this implies that inflation is still on the rise even though the trend from last year was worse month-on-month than the corresponding period this year.”
He also noted that with the Consumer Price Index (“CPI”) which is the speed at which the prices of the goods and services bought by households rise or fall was 344.7 as at October last year and currently stands at an all-time high of 396 at the moment.
He further explained that as the prices of these essential commodities such as power bills, cost of gas, passenger transport, and others increases, there is a cost-push effect on inflation and the producers of inelastic commodities such as food, hospital services, and clothing are able to push the burden to the final consumer, who in turn requirehigher wages to keep up with their basic consumption needs.
He hinted that because of the high rate of unemployment, it has become more difficult for consumers to shift these costs to firms.
According to him, “The views of the Statistician-General, Nigeria Bureau of Statistics (NBS), that the country is operating an imperfect economy where the prices in one market are different from another is true and it is inevitable because of the opacity of Nigeria’s commodity markets. This is further impacted by a variety of factors including security challenges and the poor state of infrastructure in certain regions.
“Even the most efficient market systems experience price differentials and arbitrage opportunities, but these are usually temporary and the market is usually able to take in new and available information and quickly adjust the market events to establish price parity.
“For the problem of multiple prices to be solved, data disseminatingplatforms and market places such as commodity exchanges must be developed for the commodity markets. It is what makes the stock market efficient. Information on the prices and volume of these commodities must be easily accessible. I do not think we need statistical computations to realize the persistent rise in prices of common commodities that we purchase on a day-to-day basis. The increase in a clear indicator of the general trend.”