Data from the National Bureau of Statistics, NBS, showed that headline inflation for January, which tracks the prices of food, energy and other commodities, rose to 29.90%.
Food prices have also risen sharply. Bread and yam prices rose as more shoppers looked for cheaper ways to feed themselves. January’s food inflation rate was 35.41%.
“The CBN has not met its 6-9% inflation target since 2014, and has even abandoned it,” said Adedayo Bakare, an investment analyst at Money Africa.
“It has devastated both households and businesses. The result is widespread and growing poverty as a result of low purchasing power, low employment, and slow growth.”
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Nigeria’s Central Bank governor, Olayemi Cardoso, has repeatedly promised to combat inflation, but he has been short on specifics. Cardoso, speaking at the Nigerian Economic Summit Group., NESG, last month, predicted that the CBN’s inflation-targeting policy would reduce headline inflation to 21.4% by 2024.
However, the effects of this policy have yet to be seen. In the last month, he has focused more on reforming the foreign exchange market and easing a dollar scarcity that has resulted in an estimated $2.2 billion in unmet demand.
The Central Bank of Nigeria, CBN, is expected to raise interest rates at its next Monetary Policy Committee, MPC, meeting on February 26-27, 2024, with analysts expecting a 500 basis point increase to combat Nigeria’s inflation, which is estimated to be nearly three decades high.
This month, the CBN sold one-year bills at a yield higher than the benchmark interest rate, implying a potential hike at its next meeting in two weeks. Meanwhile, the Federal Government is considering establishing a National Commodity Board to address Nigeria’s escalating food inflation.
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