The Governor of the Central Bank of Nigeria, Olayemi Cardoso, said that the government’s large purchases of food items as relief for vulnerable citizens are causing food inflation to rise rapidly in the country.
This was revealed during the March Monetary Policy Committee meeting, as reported on the CBN website on Monday.
During the meeting, the Monetary Policy Committee decided to increase the benchmark interest rate to 24.75 percent from 22.75 percent in an effort to address inflation.
The Nigerian Bureau of Statistics released a report in April showing that the country’s inflation rate rose to 33.2% in March.
Food inflation also increased to 40.01%, up by 15.56 percentage points from March 2023.
The CBN governor noted that inflationary pressure remained high despite some stability in the foreign exchange market.
He said, “Despite notable stability in the foreign exchange market resulting from decisions taken at that 293rd MPC meeting, inflationary pressure remains unabated. While there is the argument that the significant tightening since the last MPC meeting is yet to fully permeate the system and yield its expected impact, the risk of galloping inflation persists.
“If such a hyperinflationary scenario is to become reality, available options to control inflation could be severely constrained. From the facts presented to the MPC, there is a clear indication that the monetary factors contributing to inflation are diminishing in their significance.
“This could be considered as evidence of the impact of decisions reached at the 293rd MPC meeting. Staff reports show that the principal drivers of acceleration in inflation are hikes in food and energy prices which are associated with structural factors,” he added.
