Steady Inflation of Diesel Prices may lead to Increased Economic Hardship, Experts warn

The Russian-Ukraine crisis has caused inflation of diesel costs which had impacted heavily and negatively on the manufacturing sector of Nigeria pushing the second quarter of Nigerian inflation around the 16% rate.

Commodity traders across the globe have commented on the situation and said that the shortage of diesel globally is expected to continue for the rest of the year, causing economic hardship to the rest of the countries that are unable to produce and refine their oil.

The Manufacturers Association of Nigeria (MAN) have expressed their concern about the still-rising diesel prices stating that the high cost of diesel is expected to lead to the high cost of goods and services like transportation, banking, etc, from the high cost used to fund and transport these goods and services.

MAN warned that this present development could further deplete the already depleting purchasing power of Nigerians and they urged the Federal Government to reduce the pressure mounted on the population.

"As we enter the second quarter of the year, the first quarter has shown us how hard the diesel costs have hit every Nigerian sector". 

 According to the consumer price index report, released by the National Bureau of Statistics (NBS), the Nigerian inflation rate changed direction in February, rising to 15.7%  as against last month’s price of 15.6%.

As Omole says, the Nigerian naira is devalued and because this is election season, there is a political incentive not to devalue it the more.

During the Financial Times Global Summit in Lausanne, Switzerland last month, the heads of three of the largest commodity traders- Vitol, Gunvor, and Trafigura, disclosed there may be a global shortage of diesel due to the ongoing sanctions on Russia and that 3 million barrels a day would be taken off the market. This would indefinitely affect poor nations that import diesel.