In its recent Monetary Policy Committee (MPC) communiqué, the Central Bank of Nigeria (CBN) noted that the global economic disruption by the COVID-19 pandemic that spurred inflation in some countries due to supply chain impediments “may breach the long-term objective of several central banks in the medium-term”.
It stated that Emerging Market and Developing Economies (EMDEs) experienced sustained high inflation rates, with institutional factors influenced the escalation of countries with “higher inflationary pressures”.
The communique read, “The MPC noted the gradual recovery of prices, especially amongst some developed economies as inflation continued a steady movement towards the long-term objective of their central banks.
“It is expected that inflation may breach the longterm objective of several central banks in the medium term, as economic activities continue to recover with more people being vaccinated.
“In several Emerging Market and Developing Economies (EMDEs), inflation has remained relatively high, with some economies confronted with significantly higher inflationary pressures than others, because of legacy structural issues, capital flow reversals and unabating exchange rate pressures.”
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The committee noted, in the communique, that the recovery of global economies from the “six-quarter long COVID-19 pandemic” was due to an extensive vaccination roll out by countries and other factors such as relaxing restrictions of movement, reopening of economies and the resumption of international flights.
It added that “In the domestic environment, the economy is expected to remain on the current trajectory of recovery in 2021, mirroring the cautious optimistic trend in global output recovery.”
Moderate Decline In Inflation
The Committee highlighted the country’s moderate decline in headline inflation on a year-on-year basis declining from 18.17 percent in March 2021 to 18.12 percent in April 2021.
It stated that a slight fall in the inflation rate was due to “a marginal slowdown in food inflation to 22.72 per
cent in April 2021 from 22.95 per cent in the previous month.
“This was partly attributed to the Bank’s massive interventions in various sectors of the economy to stimulate aggregate demand and boost production, particularly for Small and Medium Scale Enterprises.”
According to the CBN, data showed that projections for key macroeconomic “variables for the Nigerian economy suggest that output growth will continue to recover for the rest of 2021.”
