The Lagos Chamber of Commerce and Industry (LCCI) has expressed fear that businesses may face more stress in the coming year.
The Chamber, in a statement on the November inflation rate, issued by its Director General, Dr. Chinyere Almona, on Monday, noted that the persistent rise in the inflation rate, reaching a 28-year record high of 34.60 in November, has continued to fuel a tense business environment, since elevated prices have constrained various business operations.
It argued that with the persistent rise in inflation, businesses should prepare for more stress from the burden of higher interest rates as the new year approaches.
“With the raging inflation rate, the unsuccessful attempt of the Central Bank to reduce the currency in circulation, and approaching a high-spending festive period, we are set to contend with even higher interest rates as the expected outcome from the next decisions by the CBN Monetary Policy Committee (MPC).
“The high inflation rate has far-reaching implications. One of the primary effects is reduced consumer spending. High food and core inflation erode disposable income, reducing demand for non-essential goods and services.
“Businesses also face increased business costs, as rising transportation, rent, and energy costs elevate production expenses, shrinking profit margins,” it argued.
The Chamber, however, argued that while the impact of interest rates in curbing inflation had not been effective in the past few months, it believed the economy might experience better performance of the reform measures in boosting production in the new year.
“Hopefully, we may see more of the impact of these measures on fundamental indicators like inflation, interest rates, and exchange rates,” it added.
