Analysts at the Lagos Chamber of Commerce and Industry and the Centre for the Promotion of Private Enterprise have said that the soaring cost of diesel is expected to accelerate inflationary pressure on the economy to the extent that the recent increase in the price of petrol may not be immediately felt.

The PUNCH had reported earlier that Premium Motor Spirit, popularly known as petrol, would now be sold between N170/litre and N190/litre in filling stations across the country, following what is believed to be a subtle agreement between Federal Government officials and oil marketers.

The increase follows weeks of scarcity which have led to fare hikes across major cities in the country. During this time, fuel marketers had insisted that it was no longer sustainable to distribute the product at its N165/Litre benchmark and only a price review would fix the supply chain crisis.

Speaking on how the hike would affect organised businesses, the Chief Executive Officer of the Centre for Promotion of Private Enterprise, Dr Muda Yusuf, described the decision by the oil marketers and the Federal Government as a necessary compromise that would prevent a complete collapse of the supply chain.

Asked if the new pump price might trigger higher prices in the marketplace, Yusuf said, “Not necessarily, because, before now, the disruption that had been created by the inability of the marketers to distribute at N165 had already pushed the price above N200. Outside Lagos and Abuja, I can tell you that people are buying fuel for N190, N200 plus. If you compare that to the N180 that is now the benchmark, people are still better off. In terms of the impact on price, I don’t see any considerable adverse effect that this will have compared to when you allow the system to collapse completely.”

Also speaking, the Deputy-President of the Lagos Chamber of Commerce and Industry, Mr Gabriel Idahosa, said the inflation that was already being created by the significant increase in prices of diesel and kerosene would naturally eclipse the marginal increase in the price of PMS.

He said, “Because the diesel price has gone so high already, the fuel price increase from N165 to N180 may only reflect in some movements in the general public transportation who use petrol for their vehicles, but in terms of any significant impact on inflation, it will not be there.”