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Cardoso mentions “new sources” of inflation in Nigeria and urges tax authorities to act

The Governor of the Central Bank of Nigeria (CBN) Olayemi Cardoso, has called on fiscal authorities to address new sources of inflation to complement monetary policy efforts in achieving price stability.

In his statement released following the latest Monetary Policy Committee (MPC) meeting held on February 26-27, Cardoso highlighted the need for collaborative efforts between monetary and fiscal authorities to address the multifaceted nature of inflationary pressures in the Nigerian economy.

It expressed concern over the persistence of inflationary pressures despite efforts to stabilize the foreign exchange market since its previous meeting, where the rate was increased by 400 basis points to 22.75 percent.

The CBN helmsman spoke about the risk of escalating inflation and highlighted the need to take decisive measures to prevent hyperinflationary pressure.

Although the monetary factors that contribute to inflation are declining, structural issues such as increases in food and energy prices continue to drive inflation, he explained.

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He also said there are new sources of inflation, including “vendor inflation” and government purchases for distribution as palliatives.

“In addition, huge purchases by the government for distribution as palliatives to vulnerable citizens are adding another dimension to food price inflation, with seasonal factors of food price increases during periods of religious fasting. and holidays, which adds cyclical character to prices.



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“Some of these new sources of inflation are better addressed by fiscal authorities to complement monetary policy efforts to achieve round price stability,” he said.

Similarly, MPC member Emem Usoro urged fiscal authorities to work closely with monetary policy makers to address inflationary pressures.

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This includes implementing measures to address structural factors that contribute to inflation, such as addressing problems in commodity markets and managing price fluctuations during religious and festive periods.

In addition, fiscal policies should aim to complement monetary efforts to anchor inflation expectations and promote general price stability in the economy, the expert said.

“It is clear from the above that the continued rise in inflation is detrimental to the overall recovery of the economy,” argued the MPC member.

“While the increase can be attributed to both monetary and structural factors, unwavering collaboration between monetary and fiscal authorities is essential to effectively combat the upward price movement and restore macroeconomic balance.

“Therefore, monetary policy must focus on two key issues: moderating monetary demand and stabilizing the exchange rate.”

In March 2024, Nigeria witnessed an increase in food inflation, the rate of which reached 40.01 percent, reflecting a significant increase of 15.56 percentage points compared to March 2023, when it stood at 24.45 percent.

According to data released by the National Bureau of Statistics, this upward trend was attributed to rising prices of staple commodities such as garri, millet and akpu (all classified under bread and cereals), as well as yam tubers, water yam, and other essential food products.

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At the same time, the country’s headline inflation rate rose to 33.2 percent in the same month, reflecting an increase of 1.5 percentage points from 31.7 percent recorded in February.

March inflation was driven primarily by notable increases in food and beverage costs, as well as rising energy and housing expenses.

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