By Abidemi Samuel
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The recent drop in the price of Premium Motor Spirit (Petrol) in Nigeria, courtesy of a direct fuel purchase deal between Dangote Refinery and the Independent Petroleum Marketers Association of Nigeria, may lead to a decrease in inflationary pressures in the coming months. This is according to Nigerian economists and financial analysts, including Prof. Segun Ajibola, former President of the Council of the Chartered Institute of Bankers, and Mr. Idakolo Gbolade, CEO of SD & D Capital Management.
Nigeria’s inflation rate has been on the rise, with headline and food inflation climbing to 33.88 percent and 39.16 percent in October 2024, according to the National Bureau of Statistics’ latest Consumer Price Index. However, the reduction in fuel prices is expected to have a ripple effect on the cost of doing business in the country, potentially leading to a decrease in inflationary pressures.
Ajibola noted that monetary policies, such as interest rate hikes, have not been effective in addressing Nigeria’s inflationary pressures, which are largely cost-induced. He emphasized that the Central Bank of Nigeria (CBN) has been tackling inflation with the wrong medicine, and that a more comprehensive approach is needed to address the country’s economic challenges.
Idakolo also expressed concerns about the CBN’s monetary policies, stating that they have not had a significant impact on inflationary pressures in the past 10 years. He argued that the economy has been experiencing inflationary pressures for over a decade, and that a more effective approach is needed to address these challenges.
The recent fuel price reduction is seen as a positive development, with experts predicting that it could lead to a decrease in inflationary pressures. The direct petrol sale deal between Dangote Refinery and IPMAN is expected to discourage importation of petroleum products and eliminate the cost associated with importation.
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