By
Chike OlisahThe Minister of Finance, Budget and National Planning, Mrs Zainab
Ahmed, has revealed that the inflation rate in Nigeria is largely driven
by the cost of transportation.
This disclosure was made by the Minister during a virtual
consultation and stakeholders engagement to discuss the economic and
fiscal policy drivers underpinning the Finance Bill 2020, on Friday,
November 13, 2020.
The recent increases in the retail pump price of petrol, which is
used by most of the commercial transporters as energy for the vehicles,
have led to sharp increases in transport costs.
According to the latest report from the National Bureau of Statistics
(NBS), the average transport fare paid by commuters for bus journeys
within a city increased by 7.92% month-on-month and 63.88% year-on-year
to N309.73 in September 2020.
Ahmed revealed that the finance bill
contained some interesting new proposals like fiscal relief for mass
transit, which is designed to provide support to mass transit by
reviewing the duties regime. She said this is because the Federal
Government recognizes transportation as one of the major cost drivers in
the economy.
She said, “If you look at the rate at which our inflation is
going, and you disaggregate the components, you will find that inflation
is largely driven by transport cost. So, the essence here is to reduce
transportation cost so that businesses will have ease and pass benefits
to eventual consumers.”
Nairametrics had reported that Nigeria’s inflation rate rose to
13.71% (year-on-year) in September 2020, indicating 0.49% point higher
than 13.22% recorded in August 2020, according to Consumer Price Index
(CPI) report, released by the National Bureau of Statistics (NBS).
The report also states that Nigeria has endured a persistent increase
in inflationary rate, growing from 12.13% in January to 13.71% in
September, which is the highest recorded in 30 months.
Analysts at Financial Derivatives Company Limited, led by foremost
economist Bismarck Rewane, said last week that headline inflation was
projected to rise to 14.5% in October from 13.71% in September.
They said it meant that inflation would be rising for the 14th
consecutive month and would also be the highest level in 33 months. Food
inflation will be the most affected as it is estimated to climb to
17.05%.
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