RIPPLES of the N280 per litre new price of automotive gas oil, also known as diesel, in some filling stations in Lagos will trigger more inflation in the prices of daily need goods.
The warning is coming behind projections by National Bureau of Statistics (NBS), in its latest diesel price watch report, that said average price paid by consumers for the produce increased by 0.69 per cent month-on-month and by 8.99 per cent year-on-year to N238.82 in May from N237.19 in April.
Describing the diesel price hike as “alarming and just too much for us to bear,” President of Association of Small Business Owners of Nigeria, Femi Egbesola, noted that purchasing power had been weak and the exchange rate of the naira to the dollar had depreciated sharply.
According to him, diesel cost also has profound implications for transportation and logistics costs.
“There is foreign exchange market illiquidity. The cargo clearing at our seaports is a nightmare. The security situation has inflicted an elevated risk to investment. Most of the trucks that move freight across the country are powered by diesel. The consequences are that sales are dropping, inflationary pressures will intensify, profit margins are being eroded and industrial capacity utilisation will drop. Elevated pressure on general price level exacerbates the poverty situation in the economy. he prices of all factors of production are increasing; even electricity tariff has gone up, and the government knows that about 90-95 per cent of industries rely more on diesel,” Yusuf said.
It will be recalled that only recently Central Bank of Nigeria (CBN) devalued the naira and adopted NAFEX exchange rate of N410.25 per dollar as its official exchange rate, days after removing the N379/$ rate from its website.
But naira fell to 502/$1 yesterday at the parallel market from 500/$1 on Friday.
Global oil benchmark, Brent crude, which averaged $62.28 per barrel in February, stood at $75.10 per barrel as of 5:15pm.