- The government has deregulated all primary energy sources, meaning their prices will likely align with international oil price trends.
- International oil price hikes exacerbate the energy pressure points, squeezing consumers’ purchasing power.
A PricewaterhouseCoopers (PwC) International Limited report has revealed that the deregulation of all energy points will put pressure on affordability for all Nigerians. The company stated this in its October 2023 Nigeria Economic Outlook released yesterday. The report stated, “Input costs will continue to pass through to consumer prices, further worsening the affordability of goods and services in the economy in the short to medium term.”
According to the report, the government has deregulated all primary energy sources, including kerosene, PMS (petrol), Automotive Gas Oil (diesel), and Liquified Petroleum Gas. This means their prices are likely to align with international oil price trends. Consequently, this adds pressure on actual income, given the persistently high inflation rate (26.72 per cent as of September 2023) and stagnant national minimum wage in the short term.
Note that rising input costs, like the 216 per cent year-on-year increase in petrol from January to September, will pass through to consumer prices as it has done in the recent inflation report; food and energy prices are rising astronomically, further straining the affordability of goods and services in the economy.
The PwC Outlook further stated that international oil price hikes exacerbate the energy pressure points, squeezing consumers’ purchasing power. While petroleum product prices might move in the same direction, the price of petrol might not rise in sync with other products due to potential partial subsidy reintroduction to mitigate the impact, especially if the minimum wage remains unchanged and there are no adequate palliative measures for the less privileged.