The Federal Government has been urged by some financial experts to enact stable policies that will encourage domestic production and address the foreign exchange demand that is driving up inflation.
Soaring inflation in Nigeria is undoubtedly a significant challenge that is affecting the country’s economy and its citizens. One of the main causes of this problem is the dependence on oil exports, which makes the country vulnerable to fluctuations in global oil prices. When oil prices rise, Nigeria experiences a surge in foreign exchange earnings, leading to increased currency supply and ultimately, inflation.
In Nigeria, the cost of food has significantly increased due to inflation. Consumers’ purchasing power is diminished by price increases, especially for those with lower incomes. The National Bureau of Statistics recently reported that Nigerians spent N61.07 trillion on household consumption in the first six months of 2023. The figure is slightly higher by 2.83% (N1.68 trillion) than the N59.39 trillion recorded in the same period in 2022, amid persistent double-digit inflation.
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Dr. Austine Nwaeze, an economics lecturer at Pan Atlantic University, suggested that the government implement beneficial policies to increase output. He stated that in order to finance the budget deficit, the Federal Government must stop using the Central Bank of Nigeria’s (CBN) methods and means.
“The authorities could implement fiscal and monetary tools that will support the growth of indigenous production firms. “This will encourage local manufacturing companies to embrace backward integration and reduce the volume of imported commodities.” “The CBN intervention is practically responsible for the increasing inflation rate in recent times,” Nwaeze said.
In his counsel, the Founder, Independent Shareholders Association of Nigeria, Mr Sunny Nwosu, said the government should address the rising foreign exchange demand fuelling inflation. He also enjoined the Federal Government to increase the budget allocation of the agricultural sector to tackle the food induced inflation.
“Allocating about 10 per cent of the annual budget to modernise our agricutual practice will enhance food produce. “Government could have schemes that absolve the excess so as to ensure competitive prices and encourage farmers to remain in business,” Nwosu added.
