World Bank has stated that import restrictions and non-flexible exchange rate management of the Central Bank of Nigeria (CBN) are why food inflation in Nigeria continues to go up.
BizWatch Nigeria understands that inflation in Nigeria reached a four-year high at 18.2% in March 2021, then eased to 16.0% in October 2021 as food price inflation fell from a peak of 22.9% in March to 18.3%. Headline inflation rose to 15.7% in February 2022, up by 0.1% point from the two preceding months.
As seen in the recent figures published by the National Bureau of Statistics (NBS), Nigeria’s Consumer Price Index rose to 15.92% last month (March), which happens to be the highest since November last year.
Citing the aforementioned data, World Bank lamented that the official exchange rate of the naira is artificial, and Nigerians are bearing the brunt at the parallel market.
The report read, “Rising food prices are the underlying factor behind the surge of headline inflation in Nigeria. Food prices have increased due to import restrictions and a nonflexible exchange rate management.
“The current regime is keeping the official exchange rate of the naira artificially strong while the naira has weakened significantly on the parallel market. Additionally, the central bank has restricted importers’ access to foreign currency for 45 products and has reduced the supply to other importers.”
Noting that food and fuel shortages weighed on consumer prices despite fuel subsidies, the financial body predicted that the ongoing war in Ukraine would worsen inflation rates.
“Food and fuel shortages put pressure on consumer prices despite fuel subsidies. Inflation is expected to remain high as the negative effects of the war in Ukraine are still coming through, with an annual projection of 14.8 per cent for 2022. Going forward, headline inflation is forecast to decline gradually to 13 and 11 per cent in 2023 and 2024, respectively,” the report added.