Businesses urged to prepare for tough 2025 as inflation hits 28yr high

Nigerian businesses have been urged to prepare for a tough 2025, especially with the unabated rise in inflation.

The Lagos Chamber of Commerce and Industry (LCCI) in a December 16th note, said that the persistent rise in inflation, reaching a 28 year high of 34.60 in November, has continued to fuel a tense business environment for operators as high prices constrained business operations.

The chamber noted that with the continuous acceleration in inflation rate, businesses should prepare a tough new year from the burden of higher interest rates.

“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 MPC,” Chinyere Almona, director-general of the LCCI said in the note.

“The high inflation rate has far-reaching implications, one of which is reduced consumer spending. High food and core inflation erode disposable income, reducing demand for non-essential goods and services,” she said.

She reiterates the present limitations of businesses in Africa’s most populous black nation. “Businesses face increased business costs, as rising transportation, rent, and energy costs elevate production expenses, shrinking profit margins.”

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The director general stressed that the uncertain macroeconomic environment weakens the investment climate, deterring both local and foreign investments.

She noteed that a 34.60 percent inflation for a country with 133 people living in multidimensional poverty, further threatens economic growth by diminishing the competitiveness of domestic industries and stifling expansion.

However, she expressed hope in the reform measures aimed at boosting production. “While we are all confronted with a weak impact of interest rates on curbing inflation, we see a better performance of the reform measures implemented to boost production.”

“Hopefully, we may see more of the impact of these measures on fundamental indicators like inflation, interest rates, and exchange rates.”

She called for a coordinated effort in driving oil production to earn more FX, which is needed to defend the naira in the short term.

On worsening insecurity, she called for the use of intelligence and surveillance technology be adopted to enable multi-level policing.

“Soaring food prices, rising energy costs, and widespread price pressures across various sectors, including housing, transportation, and personal services, primarily drive the persistent increase in inflation,” she said.