Economists opine that Consumer Price Index (CPI) measures changes in the purchasing-power of a currency and the rate of inflation.
According to them, CPI expresses the current prices of a basket of goods and services in terms of the prices during the same period in a previous year to show effect of inflation on purchasing power.
For instance, a market survey carried out in some parts of the country recently indicates that a bag of foreign rice which was sold between N11, 000 and N13, 000 at the beginning of 2016 is now sold between N16, 000 and N17, 000.
Also, locally produced rice is sold at N15, 000 as against foreign rice sold at N15, 500
A seller of the commodity, Malam Abdullahi, Isa noted that the increase in the price was as a result of the Eid el-Fitr period and the forces of demand and supply.
According to him the prices keeps fluctuating which makes buyers uncertain of their next purchase.
In a vegetable market in Abuja, a tomato seller, Alhaji Murtala Bala also said the price of a basket which sold between N25, 000 and N30, 000 in May now sells for N 8, 500.
He explained that earlier in the year, it had been all anger and pains for households as the price of tomatoes went up across the country as a result of scarcity caused by a pest also known as Tomato Ebola.
Bala, however, explained that food crops unlike manufactured goods were usually seasonal which gave rise to price fluctuation in perishable good as against the manufactured products.
A buyer, Mrs Anita James, while reacting to the ban on some import commodities, opined that if the action would help the economy and check inflation rate, then it was a welcome development.
“However, government needs to revamp the moribund industries, empower the youth, make agriculture attractive so that we can eat what we produce.
“Resources like electricity and good road network should be made available to reduce cost of production by local manufacturers,’’ she advised.
Nonetheless, Anita decried the cost of living in the country, saying a measure of beans which she used to buy for between N250 and N 300 is currently sold for N400 because of inflation rate.
“I use to buy my baby’s milk for N1, 400 but it is now sold for N1, 600 and N1, 700; this period has enabled people to really draw up opportunity costs,’’ Anita noted.
Worried by the rate of inflation, Mr Femi Ekundayo, a former President, the Chartered Institute of Bankers of Nigeria (CIBN), urged the Federal Government to prune the rising inflation figures by tackling their root causes.
While quoting the CPI as reported by the National Bureau of Statistics (NBS), Ekundayo said that the bureau had put the June inflation figure at 16.5 per cent from 15.6 per cent in May.
“It also said that the CPI, which measures inflation, had continued to record relatively strong increases for the fifth consecutive month.
“While imported foods continue to increase at a faster pace, the food sub-index on the aggregate increased, albeit at a slower pace in June relative to May.
Ekundayo noted that the government’s policy on job creation could reduce inflation if properly implemented.
He recalled that the Central Bank of Nigeria (CBN) had restricted importers of 41 items from accessing foreign exchange, noting that the affected importers were still accessing funds from the parallel market.
According to him, a period of slow economic growth should stimulate local production and the pruning of consumers’ appetite for imported goods.
He advised the government to ensure that the reforms in the power sector brought about the needed change to cut down inflation.
“There should be a pragmatic approach to bring down inflation to a figure not more than 12 per cent by the end of the year,’’ Ekundayo said.
Besides, an economist, Dr Aminu Usman, has predicted that Nigeria might likely experience food shortage in 2017 if high inflation was not properly checked.
Usman said that food inflation would have reduced in September 2016 as agricultural produce were harvested from farms.
“ It is expected that prices of agricultural goods and products to fall in the CPI basket with the new harvests.
“It is not likely that we will experience that because what will make farmers to produce have not being provided for them.
“The farmers have not been getting farm inputs as before and I want to tell you that fertiliser supply is almost non-existence.
“So, it is likely that we might experience food shortage in 2017 if the trend continues,’’ he said.
He said that the CPI indicated the level of decline in the economy and the inability of relevant authorities to ease the closure of the country’s border to enable food imports.
“Rising food prices contribute a lot to the escalating inflation,’’ he noted.
Sharing similar sentiments, the Lagos Chamber of Commerce and Industry, has urged the Federal Government to further review the restrictions on some imported items to maintain stability in the economy.
The Director-General of the chamber, Mr Muda Yusuf, said there was the need to ensure that there was a balance between the desire to be self-reliant and the welfare effects on the citizens.
“If the gap between domestic capacity to produce and the domestic demand is too wide, it creates a crisis for the citizens.
“It will have a major welfare effect, especially if it has to do with some staple foods and raw materials. So, maintaining a balance is very critical to the growth of the economy,’’ Yusuf said.
He observed that some of the policies of the past years had adversely affected investors’ confidence and affected liquidity in the system.
According to him, most investors were not willing to bring in their money because of liquidity issues.
“CBN does not have the capacity to support the demand for foreign exchange since the economy is largely import dependent.
“It is easier to destroy confidence than to rebuild it, so it will take some time for the confidence to be restored.
“Although some policies have been put in place to restore confidence like the flexible exchange rate, rebuilding confidence is always difficult,’’ he noted.
He stressed the need to address the energy challenges, adding that productivity and job creation could not be boosted in an economy without a stable power.
He also said the government needed to declare a state of emergency in the power sector to boost economic activities.
“The present power situation is not giving us the right kind of outcome. There has to be a drastic step taken to deal with the power situation,’’ Yusuf said.
However, in response to high rate of inflation, President Muhammadu Buhari recently directed the immediate release of 10,000 tonnes of grains from the national strategic grains reserves for national distribution to check food price increases and exploitation of ordinary Nigerians by traders.
The Senior Special Assistant to the President on Media and Publicity, Garba Shehu, said in a statement the president had also directed the Minister of Agriculture and Rural Develoment, Chief Audu Ogbeh, to ensure that all the able-bodied men and women in IDP camps be assisted to return to farming immediately.
The directives were in reaction to calls for government measures to ease hardship associated with rising cost of food.
The Presidency, however, explained that the devastation of the economy was caused by the Boko Haram insurgency, corruption and lack of planning by the past administrations and one that should not be blamed on the present administration.
Analysts, nonetheless, believe that the solution to inflation should be the diversification of the economy.
According to them, the strength of a country’s currency, including the naira, is determined by its purchasing power vis-à-vis other currencies of the world.
They hold the belief that interest and inflation rates are fundamental macroeconomic variables, capable of changing the direction and growth pattern of a country’s economic development and stability