LCCI Hails Slight Decline in July Inflation Rate, Calls for Continued Economic Reforms

The Lagos Chamber of Commerce & Industry (LCCI) acknowledges the slight moderation in Nigeria’s inflation rate to 33.40% in July 2024, as reported by the National Bureau of Statistics (NBS). This decline from the previous month’s rate of 34.19% marks the first easing of inflationary pressures since December 2022, reflecting a slowdown in demand and the positive impact of recent monetary and fiscal policy interventions.

The Chamber views this development as a welcome relief for the business community, which has been grappling with the challenges posed by exceedingly high-interest rates in recent months. As the effects of government actions become more apparent, LCCI urges the government to maintain and enhance the cost-relief measures that have been introduced to lower the cost of doing business in Nigeria.

However, LCCI notes with concern the marginal rise in core inflation from 27.49% in June to 27.47% in July. This trend underscores the need for policymakers to adopt an appropriate policy mix that will consistently drive down inflationary pressures. The Chamber also emphasizes the importance of addressing long-term structural issues, particularly in agriculture, manufacturing, and export sectors, to ensure sustained economic stability.

To further extend the current ease in prices, LCCI recommends that the government sustain and expand key programmes and policies, including import duty waivers on food and drugs, the promotion of Compressed Natural Gas (CNG) vehicles as a cost-effective transportation alternative, ongoing foreign exchange market reforms, provisions for direct crude supply to local refineries, and the transition to renewable energy sources.

The Chamber also stresses the importance of addressing the root causes of food insecurity in Nigeria. This includes empowering farmers with access to essential information on crop production and market prices, increasing agricultural inputs like fertilizers, enhancing mechanization, resolving land use conflicts, mitigating the impact of climate change on farmlands, and adopting modern irrigation techniques.

Despite the positive inflation news, LCCI is concerned about the Central Bank’s recent report that the Purchasing Managers Index (PMI) for July fell below the optimism level of 50%, dipping slightly to 49.7%. To boost industry confidence in the economy, the Chamber calls for sustained efforts to create a more stable and predictable policy environment.

LCCI also highlights the need to continue the fight against crude oil theft and pipeline vandalism to ensure higher output, which is crucial for meeting the crude supply needs of local refineries.

The Chamber further notes that beyond staple crops, the poultry and fisheries sectors are key drivers of food inflation. The newly established Ministry of Livestock Development is expected to play a critical role in addressing the current shortages in these sectors.

With increased funds flowing to Local Government Areas, LCCI anticipates a grassroots development revolution, as subnational governments take on greater responsibility for economic development. The Chamber encourages these governments to replicate successful federal-level initiatives to maximize the positive impact on the economy.

Finally, LCCI calls on the government to intensify efforts to combat insecurity, which continues to undermine investor confidence in Nigeria. The Chamber also urges support for the productive sector and the incentivization of export-oriented goods production to enhance foreign exchange earnings and stabilize the FX market.