Nigeria: Central Bank Governor Urges Collaboration to Tackle Inflationary Pressures

Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has emphasized the necessity for fiscal authorities to address emerging sources of inflation, urging collaborative efforts between monetary and fiscal policymakers to achieve price stability.

In a statement released following the recent Monetary Policy Committee (MPC) meeting held on February 26 and 27, Cardoso underscored the importance of joint action in confronting the multifaceted nature of inflationary challenges facing the Nigerian economy.

Expressing concern over the persistent inflationary pressures despite previous efforts to stabilize the foreign exchange market, Cardoso highlighted the risk of escalating inflation and stressed the need for decisive measures to prevent hyperinflationary pressure.

While acknowledging the diminishing impact of monetary factors on inflation, Cardoso identified structural issues such as food and energy price increases as primary drivers of inflation. He also highlighted new sources of inflation, including ‘seller inflation’ and government purchases for distribution as palliatives.

Cardoso emphasized the role of fiscal authorities in addressing these emerging sources of inflation to complement the efforts of monetary policy in achieving comprehensive price stability.

Echoing Cardoso’s sentiments, MPC member Emem Usoro emphasized the importance of close collaboration between fiscal and monetary policymakers to address inflationary pressures effectively.

Usoro advocated for measures targeting structural factors contributing to inflation, including interventions in commodity markets and strategies to manage price fluctuations during religious and festive periods.

Additionally, Usoro stressed the need for fiscal policies to align with monetary efforts in anchoring inflation expectations and promoting overall price stability in the economy.

Highlighting the detrimental impact of rising inflation on the broader economic recovery, Usoro emphasized the imperative of unwavering collaboration between monetary and fiscal authorities to combat upward price movements and restore macroeconomic equilibrium.

The recent data released by the National Bureau of Statistics for March 2024 indicated a surge in food inflation, reaching 40.01 percent, attributed to escalating prices of staple items such as garri, millet, and yam tubers.

Simultaneously, the country’s overall inflation rate rose to 33.2 percent in the same month, driven by notable increases in food and beverage costs, alongside rising energy and housing expenses.