The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has listed high foreign exchange rates on imported food items and insecurity in farming communities as some of the key factors driving food inflation in the country.
The CBN governor, Yemi Cardoso, who spoke at the press briefing following the 295th MPC meeting of the bank on Tuesday, said the MPC observed that food inflation is the major driver of inflation in the country.
According to Cardoso, the MPC noted that the surge in food prices in the country is influenced by factors such as the elevated exchange rate on imported food items, increasing security challenges, and the rising cost of transportation, among others.
On the side of domestic production, Cardoso said the committee encourages the fiscal authorities to tackle insecurity to ensure food production in farming communities.
“The MPC however noted that the inflationary pressure continues to be driven largely by food inflation.
“The committee thus reiterated several challenges confronting the effective moderation of food inflation which include rising cost of transportation of farm produce, infrastructure-related constraints along the line of distribution network, security challenges in some food producing areas and exchange rate pass through to domestic prices for imported food items.
“The MPC urged therefore that more be done to address the security of farming communities to guarantee increase in food production in these areas,” Cardoso said.
CBN’s Monetary Tightening Working
Speaking further, Cardoso said the committee observed that the decline in the inflation rate on a month-to-month basis is a clear indication that the hawkish position on MPR is indeed working.
He also said that the critical mandate of the CBN remains price stability, which includes employing different monetary tools to rein on inflation.
“The key focus of the MPC remain to achieve price stability by effectively using tools available by the monetary authority to rein in inflation.
“Members observe while year-on-year headline inflation in April 2024 rose moderately, the month-on-month on headline, food and core inflation decline significantly. This suggests that the recent tight monetary policies stand of the CBN is beginning to yield desired outcomes,” Cardoso added.
What you should know
According to the Nigeria Bureau of Statistics (NBS), food inflation as of April 2024 stands at 40.53% on a year-on-year basis.
This marks a substantial increase of 15.92 percentage points from the 24.61% recorded in April 2023.
This significant rise in food inflation can be attributed to higher prices for several items including millet flour, garri, bread, prepacked wheat flour, and semovita.
On its part, the federal government continues to unveil different policies to address food inflation, including the release of grains from the reserves and the donation of fertilizers to farmers in the country.
However, this has not had any effect on food inflation as prices of food items continue to skyrocket in the country.
