The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has said that the huge purchase of foodstuffs by the government as palliatives is contributing to the galloping food inflation in the country.
He stated this in his contributions during the March Monetary Policy Committee, which was published on the website of the CBN.
The MPC increased the benchmark interest rate to 24.75 per cent, from 22.75 per cent.
The committee had said that its hawkish stance was to tackle inflation.
However, the country’s inflation rate accelerated to 33.2 per cent in March, with the food inflation rate reaching 40.01 per cent, a year-on-year increase of 15.56 percentage points from 24.45 per cent in March 2023.
According to the National Bureau of Statistics, the surge in food inflation could be attributed to rising prices for items such as garri, millet, yam tuber, water yam, and others.
Following the removal of fuel subsidy, the Federal Government approved N5bn for each state and the Federal Capital Territory to enable them to procure food items for distribution to the poor in their respective states.
In his comments, the CBN governor noted that inflationary pressure had failed to abate despite the hike in the interest rate in February.
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. Further, new dimensions of inflationary pressure are emerging. First, ‘seller inflation’ arising from the oligopolistic structure of commodity markets such as noticed in the prices of local commodities is gaining significance. In addition, huge purchases by the government for distribution as palliatives to vulnerable citizenry is adding another dimension to the food price inflation, with seasonal factors of food price increases during religious fasting and festive periods, adding price cyclicality.”
He further said that the new sources of inflation were better addressed by the fiscal authorities to complement the efforts of monetary policy.
Another member of the committee, Bala Bello, echoed a similar sentiment about the rising inflationary trend, saying, “Both food and core inflation rose in February 2024, underpinning acceleration in headline inflation to 31.70 per cent in February 2024 from 29.90 per cent in the previous month. This continued rise in inflation was mainly due to persisting high production costs, lingering security challenges and exchange rate pressures.
“Inflation is currently unacceptably high and requires decisive and coordinated efforts to curb it, given its adverse impact on citizens’ purchasing power, investment decisions and broad output performance.
According to Bala, the Federal Government’s initiatives at addressing food insecurity, such as the release of grains from the strategic reserves, distribution of seeds and fertilisers, and support for dry season farming, are important and commendable.
Peter Obi of labour party recent cautioned President Tinubu government over the construction Lagos calabar coastal road makes lots Of Sense. Because the problem facing the country call for immediate solution and not long-term .solution The construction of Lagos Calabar coastal road should not be the country priority now.indtead the federal government should mobilized enough resources towards agro business by partnering with local and foreign investors The Lagos Calabar coastal road is capital intensive which Nigeria could not afford at this time. President Tinubu should not involved his administration n any unfulfilled projects when our naira fast depreciating by the day .President Tinubu should patronized made in Nigeria vehicles and not foreign ones The federal government and law makers are number one enemy of the country. . I call on President Tinubu to leads by example to buy and drives locally made vehicles of Innoson Nord vehicles and made it compulsory all government agencies, parastatals drives made in Nigeria, including our foreign diplomat.and there’s no excuse to talk and cannot walk the talk . How on earth can local vehicles manufactured company improved on their products without patrini them and tells these company to make quality vehicles . .Peter Obi hit the nail on the head Its indeed a wasteful of resources for the construction Lagos Calabar coastal road and paying out billion of dollars to compensate property destroyed. Just Lagos Ibadan road with less kilometers took many decades to be completed and still not gully in use . Many reasonable right thinking Nigerian should be very worried that the Lagos Calabar coastal road not ended up to be another white elephant projects . Nigeria goes nowhere as long as any rightful thinking person make some valid points and quickly associate such statement to ethnicity and petty politics . Honestly Peter Obi statement is very valid any time any day over the ill timing of ongoing Lagos Calabar coastal road projects. That’s why the country finds hers self where it is today where truth never see the light of the day.To be an opposition party should be a blessing to Nigeria and not the other way round .Its only then government in power could make the right decision .President Tinubu should know one thing that Peter Obi statement should be taken very serious because he means very well for the country and stop listening to some political sychropphane