TUESDAY’S petrol price shock has heightened fears of further increases in inflation numbers. This is bound to inflict more pain on citizens and businesses. The NNPC Ltd. raised pump prices to N855 and N897 per litre up from N617/l a few days after the national oil company admitted it was in dire financial straits. Independent marketers adjusted their prices to between N930 and N1,200/l.

In a country where the price of petrol has a cascading effect on prices, especially transportation, food, and other life essentials, this is another sobering moment. Transporters in major cities have hiked fares by up to 50 per cent. Commuters now trek long distances to work or are not showing up at all. Business owners fear lower patronage.

Nigerians have had no respite from significant and continuous price increases affecting all goods and services since President Bola Tinubu cancelled petrol subsidies in May 2023. Prices jumped from N195 upwards to N600 following the naira devaluation.

Presidential spokesman, Bayo Onanuga, insisted the NNPC risked collapse if it continued to subsidise petrol. Nigerians are disappointed that the price hike coincided with the announcement that the Dangote Refinery had started petrol production without the anticipated price reductions.

Hopes that Nigeria’s inflation rate had started to trend downwards have now been dashed. Inflation dipped marginally in August to 33.4 per cent, down from 34.19 per cent a month earlier. The latest 66.4 per cent petrol price hike will return that metric on a sky-bound trajectory.

The development has effectively derailed the CBN’s year-end inflation target of 21.4 per cent, which the Governor, Yemi Cardoso, had in February, said would be achieved through the Bank’s inflation-targeting policy.

Inflation rose from 22.4 per cent in May 2023 to 33.95 per cent a year later following petrol subsidy removal and naira devaluation. This marked the highest rate since March 1996 and an extension of 16 months of consecutive increases. The Bank will have to dig deeper into its box of tricks to address this unfolding scenario.

The Manufacturers Association of Nigeria has warned that expected higher inflation could spell doom for companies, especially MSMEs, which have been limping along on thin margins. MAN said the price hike would translate into increased production and logistics costs for manufacturers and other businesses that could force some to scale down operations or even shut down.

These grim prospects pose a huge challenge for the government as it tries to find a balance between easing the fuel subsidy burden on the economy initially estimated to reach N5.4 trillion by year-end.

Over the past 15 months, Nigerians have endured a cost-of-living crisis. Food inflation surged to 40.9 per cent in June up from 25.3 per cent a year earlier as prices of staples become increasingly out of reach for households.

While the NNPC price adjustment suggests that the petrol subsidy has been removed or reduced much more significantly, the Federal Government must prepare to intervene to cushion the inevitable fallout. This should go well beyond the tokenism associated with the distribution of so-called palliatives.

MSMEs, which house over 39.6 million businesses and make up 96.7 per cent of all enterprises in the country, need to be supported with more incentives, especially tax relief.

The risk of further social unrest with labour unions, students and civil society warming up to challenge the petrol price hike means that the government must engage meaningfully with all stakeholders.

The government must ensure that fuel prices are tamed in the short term with sustained supply from local refineries. The naira crude sales arrangement with Dangote Refinery must be extended to all domestic refiners. The NNPC refineries should be sold outright. Given their murky history, no serious investor will enter any concession arrangement as proposed.

worksmart:
They now calling it a hike and not subsidy removal!

Do you wonder why?

Because Nigeria has never subsidized fuel and the lie and scam is to call massive fuel hikes subsidy removal as it is more paletable lie to justify the massive hike or essentially fuel tax that there are no accountability about how the revenue accrues is spent.

However they wise enough not to over-use the term "subsidy removal " before they prompt Nigerians to start think about what is really going on with the fuel prices and discovering the deception.

givedemwotowoto:
If this hardship doesn't cure the tribal bigotry in your blood for the next election, then nothing can cure it

DeepSight:


I have promised you that you will die of hunger and starvation in biting poverty. Its not too far away, just be a little patient, you will experience it. You cannot escape it. On the day of your death you will not be able to afford any food to eat or water to drink.

DeepsightX:


Why do you ignore the biggest problem in this matter in all your analysis - official corruption?
Do you not know that even if not a penny of subsidy is paid for 100 years so long as that factor remains, we will end up in the same situiation or worse?

Are you that stupid or just dishonest?

The fact that you are a jobless and hungry crossdressing homosexual who is also a serial killer should not render you so stupid.
It will, however, ensure that you die starving.

And so will the accursed moderator.

Iamanoited:
YES YOU ARE RIGHT.
THIS IS TINUBULATION.

mmadu4:
Nigeria has gone to dogs. USELESS AND FOOLISH Nigerians voted for this disaster

Naira20:
Yes but those people's votes were not enough to rig him in.

In Lagos, out of 7million registered voters, less than 160,000 fools voted for Tinubu.
Tell me which states voted for him? Is it Osun where his nephew was just removed? Or Kano where kwakwanso held sway?

Tinubu didn't win the elections, Peter Obi won.

nairalanda1:

[b]
At the end, we should have removed subsidy in 2012. [/b]Even earlier.

nairalanda1:


I believe that APC should have been voted out this last election (and in fact, APC would have lost the election if not for the division in the opposition)...but if your preferred candidate won, the same thing would have played out.

The problem is years of subsidising fuel have contributed to a massive debt problem for Nigeria. Keeping fuel below its production cost for years has meant years of deficit budgets and more deficit budgets.....meaning as at August 2022, we were spending 90% of our revenue on debt servicing.

A graded removal of fuel subsidy as some were proposing would have still left us in more debt (and tinubu is doing the same thing).

At the end, we should have removed subsidy in 2012. Even earlier.

washmibili:
If this inflation rise above this I can't take it anymore o