Experts attribute inflation rate rise to border closure
http://www.hrlnews.com/2019/10/experts-attribute-inflation-rate-rise.html
Financial experts on Wednesday attributed rise in inflation rate for
the month of September to border closure and the new minimum wage.
They stated this in separate interviews with the News Agency of
Nigeria (NAN) in Lagos, in reaction to September inflation figure
released by the National Bureau on Statistics (NBS) on Oct. 15.
NAN reports that Consumer price index (CPI) report released by NBS
shows that inflationary pressure resurfaced in September, as the
headline inflation widened by 0.22 basis points to 11.24 per cent from
11.02 per cent in August.
The inflation figure, according to NBS, is the highest since May 2019.
Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo
University, Ago-Iwoye, Ogun, said that the rise in inflation was not a
surprise due to the border closure that led to increase in prices of
food.
Tella said that the closure of the borders resulted in initial increase in price of rice, a major staple food in the country “We should not be surprised with the rise in inflation rate.
“The closure of the borders resulted in initial increase in price of
rice, a staple food, and subsequent increase in other food items,” he
said.
Tella said that announced take-off of the minimum wage increase also
contributed to increase in prices of goods and services, and attendant
hike in inflation rate.
He however, described government’s closure of land border as a
welcome development, saying that it would lead to increased local
production of goods.
“I support the border closure, so long as it can be sustained and force increased production of goods locally.
“The initial pain is what we are suffering, but in the medium term,
we will witness increase in local production and subsequent fall in
prices of goods like rice and other annual products,” Tella said.
He said that the current high price of local rice was due to hoarding
of available imported rice to avoid being seized by the customs and
the inability to meet up with local demand.
According to him, the price will soon reduce because the policy will force many farmers to plant more rice.
“Our taste buds will soon be changed to consuming local rice as it is
currently with for imported rice and other imported food items.
“Customs should prevent smuggling of rice out of the country, particularly through the northern states’ borders,” Tella said.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd.,
said the inflation figure hike was traceable to closure of border
without adequate preparation.
Omordion said that insecurity in the country had contributed to
inflation rise within the period, as less farmers were in the farm.
He said that the Federal Government needed to address the security challenges to stem inflation in the remaining months of 2019.
Omordion, who said that the closure of land borders was a welcome
development, however, said its implementation was wrongly timed.
He said that government should have worked with farmers to ensure
adequate supply and storage of locally-made goods, to mitigate
artificial price increase.
Omordion said that some domestic producers would take advantage of the policy to hike prices due to high demand.
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