Nigeria is currently facing a significant challenge with inflation, which has been steadily increasing over the past year. The National Bureau of Statistics (NBS) reported that the Consumer Price Index (CPI), a key indicator of inflation, rose to 27.33% in October, up from 26.72% the previous month. This increase reflects a broader trend of escalating prices affecting households, businesses, and policymakers.
Key factors driving this surge in inflation include the removal of the petrol subsidy in May, the floating of the naira exchange rate in June, and a persistent scarcity of foreign exchange (FX). Year-on-year, headline inflation has jumped by 6.24% compared to October 2022, standing at 21.09%.
The NBS’s October CPI report also showed a significant year-on-year increase in food inflation, rising by 7.80% to 31.52%, compared to 23.72% in the same period last year. This rise is attributed to higher prices for essential food items like bread, cereals, oil, fat, potatoes, yams, tubers, fish, fruits, meat, vegetables, and dairy products. However, there was a slight decline in month-on-month food inflation, dropping by 1.91% from September.
Inflation impacts various groups differently. For the average person, it means paying more for the same quantity of goods, while economists view it as a general increase in price levels over time. High inflation can distort consumer behavior, destabilize markets by creating shortages, lead to income redistribution, and weaken purchasing power.
Central banks worldwide, including Nigeria’s Central Bank (CBN), view high inflation as detrimental and strive to control it. The CBN’s Monetary Policy Committee (MPC) is set to meet to develop strategies to address this issue. They are guided by the advice of former CBN Governor and former Emir of Kano, Lamido Sanusi, who emphasized the need for strategic measures against rising inflation, focusing on agriculture and education, particularly for girls.
CBN spokesperson Dr. Isa AbdulMumin remains optimistic, suggesting that recent monetary policy adjustments and money market reforms are starting to show positive effects. He cites the deceleration in prices observed since September and the reforms initiated in October, which have contributed to a significant drop in month-on-month inflation.
With the new leadership of Cardoso at the CBN prioritizing price stability, there are high expectations for progress toward a single-digit inflation rate. Additionally, a collaborative effort with fiscal authorities is anticipated to address structural imbalances contributing to inflationary pressures in Nigeria.