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CBN Claims Monetary Policy Tightening A Success As Inflation Slows For Third Consecutive Month

Nigeria’s Central Bank has highlighted the third consecutive monthly drop in inflation as evidence of successful monetary policy interventions.

The Central Bank of Nigeria (CBN) on Saturday said with the moderation in the month-on-month headline inflation, which slowed for a third time in a row in May 2024, its monetary policy tightening measures enacted this year amid mounting inflationary pressures are yielding the desired impact on the economy.

However, this came as the Abuja Chamber of Commerce and Industry (ACCI) declared that persistent hikes in food prices were worsening poverty levels across the country.

The apex bank noted the moderation in the month-on-month headline inflation, remaining the “clearest indicator” that the contractual monetary regime it introduced was working.

The National Bureau of Statistics (NBS) had reported that the Consumer Price Index (CPI), which measures the rate of change in prices of goods and commodities decelerated in May to 2.14 per cent compared to 2.29 per cent in April, and 3.02 per cent in March.

However, headline inflation further increased to 33.95 per cent in May compared to 33.69 per cent the previous month.

Also, year-on-year, food inflation reached 40.66 per cent in May, an increase of 15.84 per cent compared to 24.82 per cent recorded in the corresponding period of 2023.

Month-on-month, food inflation dropped to 2.28 per cent compared to 2.50 per cent in April.

In his reaction, the CBN’s Deputy Governor in charge of the Economic Policy Directorate, Muhammad Sani Abdullahi, said, “Slowly but surely, the inflation tide is turning.”

Abdullahi added: “While the numbers are not yet uniform for all measures, such as year-on-year across the entire country, we will continue to work diligently with coordinated policy measures to ensure that the worst of the inflationary cycle is behind us in the nearest future.”

In a statement issued on Saturday, the apex bank pointed out that the monthly inflation rate had declined from as high as 3.12 per cent in February, reflecting a slowdown in price increases for essential goods, adding that food inflation also fell for a third consecutive month to 2.28 per cent in May, from 2.50 per cent in April, and 3.79 per cent in February.

CBN maintained that the monthly inflation trend underscored conviction from members of its Monetary Policy Committee (MPC) that a combination of tighter monetary policy and appropriate coordinated fiscal measures from the federal government would prove effective in arresting the sharp increase in the cost of living that has afflicted Nigerians since the aftermath of the COVID-19 epidemic.

The CBN stated that while year-on-year inflation had continued to inch higher “it is the monthly numbers that are the all-important indicators isolating the impact since the CBN began raising interest rates in February this year.”

The apex bank stressed that the CBN Governor, Mr. Olayemi Cardoso had made inflation tackling his paramount mission the essential path to achieving sustainable economic growth in the mid-term to long-term as well as improving the standard of living of ordinary Nigerians.

Meanwhile, ACCI has declared that persistent hikes in food prices were worsening poverty levels across the country.

ACCI’s President, Emeka Obegolu (SAN), said the situation was also affecting small-scale businesses adversely, adding that basic meals were becoming unaffordable to most citizens nationwide.

“The Abuja Chamber of Commerce and Industry expresses deep concern over the persistent rise in commodity prices, which is adversely affecting small-scale business owners and escalating poverty levels in the country.

“The surge in prices of essential food items such as rice, beans, cassava flour, tomatoes, pepper, onions, and others has aggravated the plight of the average citizen, rendering basic meals increasingly unaffordable for many households,” he said, in a statement issued in Abuja.

The chamber’s president said official records from the National Bureau of Statistics had indicated a staggering 35.41 per cent food inflation rate in May 2023.

“However, on-ground observations suggest that the true food inflation rate exceeds 50 per cent, highlighting the severity of the situation and its dire impact on livelihoods.

“Experts attribute this economic hardship to the drastic depreciation of the national currency, the naira, which has significantly eroded citizens’ purchasing power. The resulting exchange rate volatility has disrupted businesses, increased production costs, and thwarted projections for economic growth,” Obegolu stated.

The chamber stated that the Chief Executive Officer, of Araba Technology, Segun Olugbile, had urged the ACCI to initiate business actions against the food crisis and hunger in the Federal Capital Territory.

Olugbile, according to ACCI, said the food crisis was becoming a serious issue due to multifaceted challenges affecting farmers, herders climate change, and the current high inflation.

He said the ACCI stood at a critical juncture as the FCT faced an escalating food crisis and hunger emergency due to challenges impacting food production and supply chains.

With an estimated 24.7 million individuals affected by food and nutrition insecurity across 26 states, including the FCT, urgent action is imperative, the expert explained.

Olugbile emphasised the pivotal role that ACCI could play in collaboration with government and stakeholders to avert a worsening crisis and bolster food security in the region.

Reacting to this, Obegolu said ACCI provides support services in the area of training and advocacy to help local businesses navigate challenges and seize opportunities in the food sector to impact its members.

He said the distressing situation has made necessities such as food, housing, and healthcare increasingly unattainable, pushing numerous households to the brink of poverty and extreme deprivation.

The NBS in one of its reports in 2023, stated that Nigeria already had 133 million people living in multidimensional poverty before the recent economic challenges. However, there are growing concerns that this number has swelled over the past eight months.

In the past, staple foods like cassava flour (garri) and beans served as affordable options for the common man. However, the current scenario paints a starkly different picture, with prices skyrocketing beyond the reach of the average citizen.

James Emejo 

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