Emefiele Downplays FX Scarcity, Says Insecurity Drives Inflation
Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN) downplays (FX) foreign exchange scarcity, attributing the country’s rising inflation to worsening insecurity in parts of the country.
Emefiele stated this on Tuesday while presenting the communique from the Monetary Policy Committee (MPC) meeting which started on Monday.
Primary responsibility of the CBN is to ensure price stability using monetary policy tools but Nigeria’s headline inflation has maintained uptrend, threatening the apex bank single digit target between 6 to 9%.
At the MPC meeting, Emefiele explained that the inflation, which has increased for the 18th consecutive month, was exacerbated by food inflation.
He said that insecurity in many food producing areas of the country was a major contributing factor.
“The MPC noted with concern the continued uptick in inflationary pressure for the 18th consecutive month as headline inflation continued on an upward to 17.33 per cent at the end of February 2021 from 16.47 per cent in January 2021.
“This increase continue to be attributed to both food and other core components of inflation.
“This specific uptick in food inflation was the major driving factor for the uptick in headline inflation.
“This was due to the worsening security situation in many parts of the country, particularly the food producing areas where farmers faced frequent attacks by herdsmen and bandits in their farms,’’ he said.
The apex bank’s governor said that while the bank was making significant intervention in the agricultural sector, the rising insecurity was limiting expected outcomes in terms of supply to the markets.
He added that the situation was a major contributory factor to the rise in food prices.
Emefiele urged the Federal Government to collaborate with relevant stakeholders to urgently address the challenge of insecurity across the country.
He said that the inflationary trend was also worsened by the hike in the pump price of petrol, the upward adjustment of electricity tariff as well as depreciation in the value of the Naira.
He, however, commended CBN’s various interventions to boost food security through its various agriculture programmes.
The CBN Governor downplayed impacts of foreign exchange scarcity that has impacted significantly the value of the local currency, Naira.
Nigeria Shifts Towards Flexible Exchange Regime
Some analysts believe that while supply shock is a key factor driving price increase, scarcity of foreign exchange to meet producers demand is also a contributing factor.
Emefiele Downplays FX Scarcity, Says Insecurity Drives Inflation
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