The World Bank has announced that import regulations and non-flexible exchange rate management of the Central Bank of Nigeria (CBN) are the major causes of food inflation in Nigeria.
The Washington-based bank said this in a new biannual report by the World Bank known as Africa’s Pulse. The report said, “Rising food prices are the underlying factor behind the surge of headline inflation in Nigeria. Food prices increased due to import restrictions and a non-flexible 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.
“Inflation reached a four-year high at 18.2 per cent in March 2021, then eased to 16.0 per cent in October 2021 as food price inflation fell from a peak of 22.9 per cent in March to 18.3 per cent. Headline inflation rose to 15.7 per cent in February 2022, up by 0.1 percentage point from the two preceding months.”
The bank further added that food and fuel deficiencies weighed on consumer prices despite fuel subsidies, adding that the war in Ukraine would likely worsen inflation rates.
It said, “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 percent for 2022. Going further, headline inflation is forecast to decline gradually to 13 and 11 per cent in 2023 and 2024, respectively”
It showed that Nigeria’s Consumer Price Index rose to 15.92 percent in March. This new rate is the countries highest recorded since November 2021, when the inflation rate dropped to 15.99 percent.
The rise in the inflation rate shows that Nigeria is not out of the global inflation surge currently being witnessed.
