The Lagos Chamber of Commerce and Industry (LCCI) has urged the federal government to cut taxes on basic food items to mitigate the effect of rising inflation on the most vulnerable Nigerians.
LCCI made the call against the backdrop of the Consumer Price Index (CPI) data released by the National Bureau of Statistics (NBS),
“With the headline inflation rate up to 22.41 percent in May – the fifth consecutive monthly rise, from 22.22 percent recorded in April, the food inflation rate also increased to 24.82 per cent, from 24.61 percent the previous month,”
The country’s food inflation rate accelerated to its highest levels in 17 years in May amid a drop in global commodity prices, according to data released by the NBS last week.
Nigeria’s food inflation rose to a staggering 24.82 per cent year-on-year in May, marking the highest level since August 2005.
This increase represents a marginal rise from the 24.61 per cent recorded in April, exacerbating the difficult moment faced by Nigerians.
The upward trajectory of food inflation is owing to several shocks that have rocked the sector, including supply chain disruptions, increased production costs, lingering effects of the COVID-19 pandemic, climate change, insecurity, currency depreciation, and fuel subsidy removal, among others.
“Food prices will remain high in 2023,” said Ibrahim Kabiru, national president of the All Farmers Association of Nigeria.
“Climate change is going to still impact production this year like previous years. Its impact is becoming devastating yearly.
“The government has also yet to address the insecurity issues that have been limiting production. All these will keep food prices up this year,” Kabiru said.
A major contributor to this inflationary pressure is the persistent insecurity in Nigeria’s agricultural regions, which has hampered farming activities and disrupted the distribution of goods.
Frequent attacks by armed groups and herder clashes have resulted in farmers’ displacement, farmlands’ destruction, and an overall decline in agricultural productivity.
The country’s food import bill is running into trillions, in the face of high insecurity along the country’s food belt states of Benue, Kaduna, Katsina, Maiduguri, and Niger.
With food prices climbing to record peaks, millions of Nigerians are facing devastating hunger and malnutrition levels.
Reacting to this development, the director general, LCCI, Dr. Chinyere Almona, recommended a pause in interest rate hikes to relieve the economic pressures on agents.
She said: “We also urge the government to implement fiscal measures such as reducing/removing the tax on basic food items to protect the most vulnerable as well as spur demand-side growth.
“We implore the government to hasten the provision of the anticipated palliatives in order to lessen the impact of the rising trend in prices on economic agents.”
LCCI expressed concern that there may be a consistent increase in inflationary pressures in the near term.
Almona also explained: “There are also fears that fuel subsidy removal and the floating of the Naira exchange rate will come with its inflationary impact.
“As a result, we anticipate businesses will implement a variety of cost reduction strategies, including downsizing and local sourcing of input factors as they bid to lower operating expenses. Also, household real income will continue to experience a decline, especially in the near term.”
