Yemi Cardoso, the Central Bank of Nigeria (CBN) Governor, attributes the escalating food prices in Nigeria to the government’s palliative buying and distribution.
This follows the fuel subsidy removal by President Bola Tinubu on May 29, 2023, leading to a N5 billion approval for each state and the Federal Capital Territory (FCT) to acquire food for the underprivileged.
Cardoso suggests that the government’s large-scale food purchases for palliatives are fuelling the country’s soaring food inflation. He expressed these views during the March Monetary Policy Committee (MPC) meeting, details of which are available on the CBN website.
Despite the interest rate increase in February, Cardoso noted that inflationary pressures persist. He stated, “Even though the foreign exchange market has shown considerable stability due to decisions made at the 293rd MPC meeting, the threat of runaway inflation remains.”
He further explained that the main drivers of inflation acceleration are food and energy price hikes, which are linked to structural factors. He also highlighted new emerging inflationary pressures, such as ‘seller inflation’ due to the oligopolistic structure of commodity markets and the government’s large purchases for distribution as palliatives.
Cardoso believes that these new inflation sources should be addressed by fiscal authorities to support monetary policy efforts.
Bala Bello, another committee member, shared similar concerns about the rising inflation trend. He said, “Inflation is currently unacceptably high and requires decisive and coordinated efforts to curb it, given its adverse impact on citizens’ purchasing power, investment decisions and broad output performance.”
Bala commended the Federal Government’s initiatives to tackle food insecurity, such as releasing grains from strategic reserves, distributing seeds and fertilisers, and supporting dry season farming.
