Sources and Remedies of Nigeria's Inflation

Sources of Inflation in Nigeria as established by the CBN, Federal Government and Financial Derivatives. 

1. Fuel Prices. 

2. Exchange Rate (Naira Depreciation, Increase in Imports and Collapse of Exports)

3. Electricity Prices

4. Food Inflation

5. Insecurity 

6. I'll add Cooking Gas prices. 

The CBN's target inflation rate is 9%, but Nigeria's current inflation rate is 17.83%, that is almost double the target. This is after several interventions by CBN. 

Inflation problems are structural. Refining capacity will reduce the fuel prices driven inflation. Increased productivity will moderate the exchange rate led inflation. 

Natural Gas Production and Investment will help with reducing electricity inflation and help drive industrial productivity and economic growth.  

Insecurity is based on government, army and northern region sincerity. And this will help fight food inflation also. Food inflation can also be fought with more technological adoption. 

Food inflation in Nigeria is above 20%, while headline inflation is 17%. This means that reducing food inflation significantly can reduce our headline inflation greatly. Afterall, 43% of Nigerians don't even have access to electricity. In that vein, we can surmise that a similar amount of Nigerians don't even consume fuel. But all these people eat food. 

Let's fix food inflation in the short term, while we work to ramp up investment in gas, which will have effects on industrial production and electricity supply. 

The verdict really here is to fix food inflation and insecurity, and headline inflation will reduce. Afterall, insecurity is also the reason why many farmers have stopped farming and why investors are not investing. This has seen our capital importation (FDI) decline by 72% year-on-year. 

We should not complicate matters. The facts are there. It's either we service nepotism to our detriment or we do the right things and make life good for everyone.

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