The Manufacturers Association of Nigeria (MAN) has reacted to the new price of Premium Motor Spirit (PMS), popularly known as petrol, warning of a high possibility of a rise in inflation figures, impacting household budgets.
In a statement by its Director-General, Segun Ajayi-Kadir, on Wednesday, the association enumerated the impacts of the petrol price adding that Small and Medium-sized Enterprises (SMEs), which often operate on thin margins, could be hard-hit by the development.
Earlier on Tuesday, September 3, 2024,
NNPCL increased the prices of petrol from about ₦568 per litre to ₦855 per litre, across all its filling stations/depots nationwide.
Reacting, Kadir said, “So, in terms of what the impact might be and judging from what we have witnessed in the past, the cost of transportation may increase, and so would the prices of goods and services. As the cost of petrol rises, consumers will spend more on transportation and energy, leaving them with less disposable income.
“This decrease in purchasing power may lead to reduced demand for non-essential goods and services, affecting businesses across various sectors. These are pointers to the high possibility of a rise in inflation figures, impacting household budgets”.
He expressed worry about further impact on the “already lackluster performance of the manufacturing sector” adding that there is no doubt that it will add to production input and logistics costs.
According to him “These will lead to higher prices and in the face of dwindling disposable income of the average Nigerian” with a “further deep in consumer demand will see manufacturers’ unplanned inventory rising and reduction in capacity utilization.”
The DG warned that businesses may need to adjust their pricing strategies, and this could lead to reduced profit margins if consumer demand weakens, with the Small and medium-sized enterprises (SMEs) hardly hit.
“The increased costs could force some to scale down operations or even shut down if they are unable to pass on the additional costs to consumers. Globally, there is an increase in crude oil prices. Our refineries are not producing and we import fuel. The increase in the price of crude oil will have a direct impact on the cost of importing fuel into Nigeria and expectedly, the NNPC would at some point, adjust domestic prices.
“Also, right from the time fuel subsidy was either reduced or removed, it became inevitable that the price may rise. You will also note the sharp decline in the value of the Naira and the impact it is bound to have on the importation of fuel,” he said.