As inflation figure continues to rise

Last week the National Bureau of Statistics released its Consumer Price Index January 2017 report. To be sure, the CPI measures the average change over time in prices of goods and services consumed by people for day to day living. The CPI increased by 18.72 percent. According to the NBS, “The Consumer Price Index which measures inflation increased by 18.72 per cent year-on-year in January 2017, 0.17 percentage points higher from the rate recorded in December 2016 18.55 percent.”
The report goes further to state that the fastest pace of growth in headline inflation year-on-year were recorded in consumables such as bread and cereals, meat, fish, oils and fats, potatoes, yams and other tubers, wine and spirits, clothing materials and accessories. Others include electricity, cooking gas, liquid and solid fuels, motor cars and maintenance, vehicle spare parts and fuels and lubricants for personal transport equipment, and passenger transport by road.

Meanwhile, the Central Bank of Nigeria is obsessed with growing Nigeria’s external reserves as a way of ending the recession in Nigeria and attracting back foreign direct and portfolio investments into the country.

It was reported last week that the country’s external reserves grew to $30.5 billion – the highest in more than 12 months. It is also reported the CBN governor is determined to grow the reserves to $35 billion by the middle of 2017 and $40 billion by the end of the third quarter of the year.

At face value, this looks like a good strategy and plan – saving in times of declining revenues, but in reality, it is all smokes and mirrors. The CBN and by extension the government is making life more difficult for the people. By consciously choosing accretion of foreign exchange over supply of foreign exchange to the market to help Nigerians to meet legitimate needs such as import of machineries and inputs and other necessities of life.

There is currently a severe forex scarcity in the market, which is directly affecting the value of the naira. The naira, since the CBN began its irrational action of forex accretion, has been on a precipitate decline, falling to a record N516 and N625 to the dollar and pound respectively. This is also directly causing galloping inflation.

The dollar scarcity and continued devaluation of the value of the Naira is causing untold hardship in the country. Prices of goods and services have more than doubled. As can be seen from the official statistics, this includes both locally produced as well as imported goods. Industries and factories are closing shop daily due to terrible operating environment and workers are losing their jobs in the millions. Even those lucky to be in employment have seen their earnings declined even while they had to pay more than double for virtually everything. Such is the high rate of inflation that there is a feeling among traders and businesses these days that stocks (of goods) are more important than cash because prices just keep going up daily.

It is strange that a government that campaigned on the promise of change and wanting to improve the lot of the common man is deliberating hurting the people and causing despondency in the land. Since coming to power, it has done everything wrong and despite its penchant of blaming the previous administration for the woes of the country, it is clear to every discerning observer that the recession, the galloping inflation and the severe forex scarcity and fast depreciating naira are direct consequences of the actions and inactions of a government high on empty promises and ideology but so short on vision, rational thinking and common sense policies.

How, for instance, can the administration hope to fight corruption in a context of excruciating poverty, hunger, difficulty, and despondency of the people. How can a government which has made and continues to make its people poorer and more wretched hope to get them to eschew corruption and ethical practices and develop nation-building values?

It appears both the government and the CBN are bereft of clear-thinking and problem-solving individuals. In saner climes, when leaders lead their people into difficult times, they are humble enough to listen, change course and renegotiate a different bend. But not so with Nigeria. The government and the CBN just keep digging even while in a hole.