Fuel price Nigeria

Petrol Price Hike Likely to Trigger Wage Demands, Warns Economist

Development economist Mohammed Nezifi has warned that the recent hike in petrol prices in Nigeria may push the government to increase workers’ wages. In an interview with the News Agency of Nigeria (NAN) on Friday in Abuja, Nezifi cautioned that demands for wage hikes or subsidies could lead to higher fiscal deficits and increased public debt.

This comes after the Nigeria National Petroleum Company Limited (NNPCL) approved a significant price increase, raising the petrol pump price from N617 per litre to N897 per litre on September 3, 2024.

Nezifi pointed out that the price surge disproportionately impacts lower-income households, who spend a larger share of their earnings on transportation and food. He added that this could drive up poverty levels and exacerbate income inequality, widening the gap between rich and poor.

To alleviate the effects, Nezifi suggested that government interventions such as subsidies or social welfare programs might be necessary. However, he cautioned that such measures could strain public finances and deepen the country’s fiscal challenges.

Additionally, Nezifi warned that the economic pressure from rising fuel costs could spark social unrest, including protests or strikes, potentially disrupting economic activities and governance.

Echoing these concerns, another economist, David Ambi, urged the government to foster a more competitive market by reintroducing targeted subsidies or social safety nets. Ambi highlighted the importance of aligning policies with market efficiency and consumer protection to help stabilize the economy and improve citizens’ standard of living.

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