Inflation Hits 28-Year High
As 2025 approaches, Nigerian businesses are being urged to prepare for challenging times. The Lagos Chamber of Commerce and Industry (LCCI) has sounded the alarm, pointing to a rising inflation rate that has reached an alarming 28-year high of 34.60% in November 2024. This steep rise is creating a tense environment for businesses as surging prices continue to strain operations and profitability.
“The continuous acceleration in inflation rate will place immense pressure on businesses in the coming year,” noted Chinyere Almona, Director-General of the LCCI. She warned that the burden of high interest rates will worsen these challenges, urging businesses to prepare for a tough road ahead.
Festive Spending Increases Economic Strain
The LCCI’s December 16 note highlighted the compounding impact of inflation during the festive season. “With the raging inflation rate, the unsuccessful attempt of the Central Bank to reduce the currency in circulation, and the high-spending festive period, we are set to contend with even higher interest rates,” Almona explained.
Inflation has far-reaching implications for the Nigerian economy, including:
- Lower Consumer Spending: High food and core inflation are eroding disposable incomes, leaving consumers with less to spend on non-essential goods and services.
- Higher Business Costs: Increased transportation, rent, and energy costs are driving up production expenses, further shrinking profit margins.
- Weaker Investment Climate: The uncertain macroeconomic environment weakens investor confidence, deterring both local and foreign investments.
Inflation Hurts Businesses and Families
For a country where 133 million people live in multidimensional poverty, the economic situation is dire. Almona emphasized that high inflation threatens the competitiveness of domestic industries and stifles economic expansion. “A 34.60% inflation rate not only limits business growth but also reduces the purchasing power of the average Nigerian, deepening economic inequality,” she said.
Reforms Offer Hope for Change
SEE ALSO: How Inflation Is A Major Nightmare For African Startups – Report
Despite the grim outlook, the LCCI remains cautiously optimistic about the impact of ongoing reforms. “While we are all confronted with the weak impact of interest rates on curbing inflation, there is hope in the reform measures aimed at boosting production,” Almona stated.
She highlighted potential positive outcomes such as:
- Better Inflation Control: “We may see more of the impact of these measures on fundamental indicators like inflation, interest rates, and exchange rates,” she noted.
- Boost in Oil Production: Driving oil production to generate more foreign exchange could help stabilize the naira in the short term.
Calls for Coordinated Action
The LCCI stressed the need for a unified approach to address Nigeria’s economic challenges. Almona called for:
- Improved Security Measures: Adopting intelligence and surveillance technology to enable multi-level policing and address worsening insecurity.
- Stronger Policies: Ensuring reforms are aligned with long-term growth and stability.
- Focus on Food Supply: Tackling soaring food prices by supporting agriculture and fixing supply chain bottlenecks.
Adapting to a Tough Business Environment
As businesses face rising costs and weak consumer demand, adapting to the changing landscape is critical. Companies must explore cost-saving measures, diversify revenue streams, and use technology to improve efficiency. Policymakers must intensify efforts to stabilize the economy and create a favorable environment for growth.
Preparing for an Uncertain Future
The road ahead for Nigerian businesses in 2025 is filled with challenges, but resilience and planning can help reduce the impact. While inflation and high interest rates present significant hurdles, coordinated efforts between businesses, government, and stakeholders can pave the way for recovery and growth. As Almona aptly stated, “With the right policies and collective action, we can weather this storm and build a stronger, more resilient economy.”
