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Manufacturers Worried As Inflation Increases Production, Input

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Nigeria & UK: Two opposing inflation problems | Nairametrics

The Organised Private Sector is currently in a dilemma over coping with the rapid increase in cost of production input and their inability to reflect the prevailing inflation in the economy on prices of their products to the ultimate consumers as Inflation trends higher in Nigeria.


Nigeria’s inflation rose to 18.17 per cent in March, peaking at three years high and representing 19 consecutive months of increase, forcing more manufacturers of consumables to readjust their projections for the year. Inflation is the rise in the general level of prices, often expressed as a percentage; meaning that a unit of currency effectively buys less than it did in prior periods.

Rapid growth in inflation also means that standard of living of the populace will continue to decline, especially where wages remain constant and the prices of goods and service keep rising.


What the creeping inflation trend means to many Nigerians within the middle class and especially those in the lower rung of the ladder is that their capacity to live a decent life is under constant threat, resulting in gradual decline in their standard of living.


However, the rapid drop in purchasing power is not limited to individuals alone, corporate organisations are equally experiencing erosion in capacity to increase productivity due to the impact of galloping inflation on their resources. For the OPS, the rising inflation is also impacting the cost of input into their production while they have been constrained to increase the prices of their products in commensurate measure to reflect the actual growth in inflation in the economy.


At a media briefing recently, the Group Executive Director of Dangote Industries Limited, Edwin Devakumar, said Dangote Cement Plc had not increased the price of cement in the past 16 months despite the continuous rise in the cost of production and surging in demand for cement.

Though most of the distributors and marketers of cement products are taking advantage of the increase in demand, which created artificial scarcity in the market to hike retail price, Devakumar said Dangote Cement had consistently maintained the same ex-factory price for its products.

In the other sectors of the economy such as medicare, fast moving consumables, many manufacturers have been constrained to hike prices commensurate with the prevailing inflation rate.


Their reason being that many of them fear that passing the excessive cost of production to their customers may lead to apathy and consumer resistance to their products. What some manufacturers of consumables have resorted to is to reduce some of their product sizes to ensure that in spite of their inability to raise prices, they could stay afloat in the face of galloping inflation.


Many manufacturing firms are also slashing production due to their inability to procure dollars for raw materials. Also, they are being pummelled by the rising cost of energy, transportation and the rising cost of  toachinery as a result of devaluation of the local currency

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