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BY CHIKA IZUORA, Lagos
Economists, industrialists and financial analysts have revealed how hike in fuel price would negatively impact households in Nigeria.
Speaking in separate interviews with LEADERSHIP yesterday, they said unless the federal government provides ways to cushion the effect of any increase in the price of petrol, many households in the country could be spending up to over 70 percent of their income on goods and services which they were buying for less before.
There have been reactions from Nigerians since last week when the group managing director of the Nigeria National Petroleum Corporation (NNPC), Mele Kyari, disclosed that the company may soon withdraw its monthly spend of N120 billion on petrol.
The concern of most economists and financial analysts has been the implication of such policy on inflation in the country. Already, headline inflation in the country, which has been in double digits since 2016, hit a four-year peak of 17.33 percent in February, according to the National Bureau of Statistics (NBS).
Speaking with LEADERSHIP yesterday, Gbade Aderopo, an Ibadan-based industrialist said with food inflation as high as 25 percent in February, any hike in the price of petroleum products now will lead to higher inflationary trends and affect most households negatively because the cost of almost everything in the country will go up.Another industrialist who craved anonymity said the government needs to start work on the rehabilitation of moribund refineries and encourage more Nigerians to build modular refineries so that the nation will have no business importing refined petrol, which is what is consuming the income of the government.
Also, an associate professor of economics at the Lagos Business School, Dr. Bongo Adi, told LEADERSHIP yesterday that fuel cost is a major determinant of inflation because in the consumption basket of households and individuals, transportation cost is about 30 percent.
‘‘For you to do anything, you have to move. You go to school, work, market; anything that involves movement is transportation cost. After food, the next component in household spending in Nigeria is transportation. Food inflation is already hitting the skies. On the average, it is about 25 percent, (which is) higher than 17 percent headline inflation. Transportation cost affects inflation. When you put this together, you begin to have some ideas of the impact this intended…
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