The latest data from the National Bureau of Statistics has shown that food inflation is the biggest driver of price increases across Nigeria. In February 2024, the cost of food saw an annual increase of 37.92%, a staggering 13.57% rise from the previous year. The report highlights that staple foods including potatoes, yams, and bread are the main culprits behind this inflation trend. Average food inflation for the last 12 months ending February 2024 has increased to 30.07%, up by 7.95% from the previous year. In February 2024, the inflation rate stood at 3.12% monthly, representing a 0.48% increase from January 2024. This means that the average price level has grown faster than in January.

To manage inflation, the Central Bank of Nigeria (CBN) has historically used the benchmark interest rate to influence borrowing and lending rates in the economy. The CBN manages credit costs and influences consumer spending and investment levels by adjusting the Monetary Policy Rate (MPR). The CBN also uses open market operations to reduce inflation in Nigeria. In recent weeks, these operations have been oversubscribed. The CBN’s efforts in managing inflation through monetary policy rate management include a combination of tools and strategies to influence borrowing costs, manage liquidity, and support price stability. Thus, the government must take decisive actions to control the rising cost of food as it is affecting the livelihoods of millions of Nigerians. By utilizing the CBN’s strategies, the government can stabilize prices, control credit costs and provide support for the economy, as well as improve the standard of living for all Nigerians.

Director Kelvin Emmanuel of Obsidian Archenar Nigeria stated that the challenges before the Monetary Policy Committee (MPC) are daunting. He further noted that the continuous rise in inflation to 31.7% is evidence that fighting inflation by raising interest rates to tighten monetary policy is not effective.

Source: The Guardian