By Onome Amuge.
The Lagos Chamber of Commerce and Industry (LCCI) has emphasised the need for businesses to implement a variety of cost reduction strategies to lower operating expenses and maintain profitability amidst inflationary pressures.
Chinyere Almona, director-general, LCCI, in a statement reacting to the 18-year high August inflation rate of 25.80 per cent, noted that for businesses to remain afloat, they need to resort to various cost-cutting strategies for businesses including staff downsizing and increased reliance on local sourcing of raw materials, to mitigate the impact of inflation on their operations.
Nigeria’s inflation rate rose for the eighth straight month in the year to 25.80 per cent in August 2023,representing an increase of 1.72 percentage points from 24.08 per cent recorded in July 2023, according to the National Bureau of Statistics (NBS),which measured the rate of changes in prices of goods and services.
The report further noted that on a year-on-year basis, the headline inflation rate was 5.27 percentage points higher compared to 20.52 per cent recorded in the corresponding period of August 2022.
The NBS explained that the contributions of items on the divisional level to the increase in the headline index include food & non-alcoholic beverages which rose 13.36 per cent; housing, water, electricity, gas & other fuel which increased 4.32 per cent; clothing & footwear which were up 1.97 per cent; transport which increased 1.68 per cent; 1.30 per cent increase in the cost of furnishings, household equipment & maintenance;while the education index surged to 1.02 per cent.
There was also percentage increases in other components of the the divisional level as health rose to 0.78 per cent; miscellaneous goods & services rose to 0.43 per cent rate from the previous month; while restaurant & hotels; alcoholic beverage, tobacco & kola ; recreation & culture ,recorded month-on-month increases of 0.31 per cent,0.28 per cent, 0.18 per cent, respectively.Also, the communication divisional level rose to 0.18 per cent.
Addressing the inflation report, Almona said the path of price movements remains unclear in the near term, underlining the urgency of the situation. She noted further that the issue was not limited to businesses alone, as it also affects households, resulting in a continued decline in real income, especially in the near term.
The LCCI DG, therefore called for immediate action to alleviate supply-side pressures that are fueling inflation,while calling on the Nigerian government to provide palliatives to cushion the effects of rising inflation on consumers.
She also recommended prudent fiscal policies and immediate measures to combat food inflation, such as reducing and eliminating taxes on basic food items to protect the most vulnerable. This multi-pronged approach, she explained,would help to stabilize the economy in the face of growing inflationary pressures.
In addition to these recommendations, the LCCI advised the Central Bank of Nigeria (CBN) to hit the brakes on its consecutive interest rate hikes which was recently raised to 18.75 per cent, the highest it has been in 22 years.
According to the LCCI, the ball is now in the CBN’s court as it weighs the need for continued interest rate hikes against the pressing concerns of businesses and households grappling with the relentless tide of inflation.
“The Lagos Chamber of Commerce and Industry recommends government to implement prudent fiscal policy measures.
“This is particularly in terms of borrowings as well as address the challenge of food inflation by immediately reducing and removing tax on basic food items to protect the most vulnerable.
“We implore the government to hasten the provision of the anticipated palliatives to lessen the impact of the rising trend in prices on economic agents.
“Furthermore, we urge the Central Bank of Nigeria (CBN) to pause interest rate hikes to relieve the pressures on the supply side, especially at this time,” the chamber stated.