Financial experts on Wednesday attributed the 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 the September inflation figure released by the National Bureau of Statistics (NBS) on Oct. 15.
NAN reports that the 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 percent from 11.02 percent 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 an increase in prices of food.
Tella said that the closure of the borders resulted in an initial increase in the price of rice, a major staple food in the country
“We should not be surprised by the rise in the inflation rate. “The closure of the borders resulted in an initial increase in the price of rice, a staple food, and a subsequent increase in other food items,” he said.
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Tella said that the announced take-off of the minimum wage increase also contributed to the increase in prices of goods and services, and an attendant hike in the inflation rate.
He, however, described the government’s closure of the 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 an 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 the 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 the closure of border without adequate preparation.
Omordion said that insecurity in the country had contributed to inflation rise within the period, as fewer farmers were on 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 the 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.