By Ken Afor
Nigeria experienced a continuous increase in its annual inflation rate in November, marking the 11th consecutive month of such rise.
This surge pushed the inflation rate to its highest level in 18 years, creating additional challenges for the Central Bank of Nigeria (CBN) to address amidst a deteriorating cost-of-living crisis in the largest economy of Africa.
According to the National Bureau of Statistics (NBS), consumer inflation increased to 28.20% in November, up from 27.33% in October.
Official data reveals that Nigerians last encountered such high inflation levels in August 2005.
It would be recalled that on Wednesday, the World Bank issued a cautionary statement to Nigeria, urging them to take measures to curb inflation.
Additionally, they assigned the central bank the responsibility of implementing stricter monetary policies, fostering trust in the market by promoting transparent foreign exchange pricing, and gradually eliminating the practice of providing “ways and means” advances to the government.
According to the statistics bureau, the main factor contributing to the annual inflation in November was the increase in prices for food and non-alcoholic beverages.
In November, the inflation rate for food, which makes up a significant portion of Nigeria’s inflation basket, climbed to 32.84%, up from 31.52% the previous month.
Newly appointed CBN Governor, Olayemi Cardoso is determined to gradually eliminate the fiscal intervention programs of the bank as part of efforts to control inflation.
Cardoso has expressed the central bank’s intention to adopt a more stringent policy in the coming six months to effectively manage inflation. This includes the recommencement of Open Market Operations (OMO) to regulate the money supply.
Despite President Bola Tinubu’s ambitious efforts to implement significant reforms in Nigeria, the country has faced challenges such as foreign exchange shortages, a decline in oil revenue, and the theft of crude oil, which is its primary export and source of foreign exchange.
According to analysts, the depreciation of the naira, increased fuel and food prices, rising logistics costs, and the growth of money supply have been identified as key factors contributing to Nigeria’s inflation.
Since 2016, inflation in Nigeria, the most populous nation in Africa, has surged to double digits, causing a decline in incomes and savings. Despite the central bank’s decision to raise interest rates to their highest level in almost twenty years during its recent meeting, the impact on curbing inflation has been limited.
During its monetary policy meeting in July, the central bank chose to implement a smaller-than-anticipated 25 basis point hike. The bank stated that it favored a gradual increase to stabilize inflation expectations while simultaneously providing support for investment.
