By Milcah Tanimu

Olayemi Cardoso, the Governor of the Central Bank of Nigeria, has expressed concern over the significant impact of government interventions on the country’s escalating food inflation. Speaking during the March Monetary Policy Committee (MPC) meeting, Cardoso attributed the soaring food prices to the substantial purchases of foodstuffs by the government as palliatives.

Despite the MPC’s decision to increase the benchmark interest rate to 24.75%, aimed at tackling inflation, the country’s inflation rate surged to 33.2% in March, with food inflation hitting 40.01%. This marked a substantial year-on-year increase of 15.56 percentage points from the previous year.

Cardoso highlighted that inflationary pressures persist despite efforts to stabilize the foreign exchange market, indicating a need for further measures. He emphasized the emergence of new inflationary sources, including ‘seller inflation’ in commodity markets and extensive government purchases for distribution as palliatives.

Acknowledging the importance of fiscal authorities’ intervention in addressing these inflationary trends, Cardoso stressed the need for coordinated efforts between monetary and fiscal policies.

Echoing similar sentiments, Bala Bello, another MPC member, emphasized the adverse impact of high inflation on citizens’ purchasing power and investment decisions. While commending the Federal Government’s initiatives to address food insecurity, such as releasing grains from strategic reserves and supporting farming, Bello underscored the necessity for decisive measures to curb inflation.

As food inflation continues to pose challenges to economic stability and welfare, Cardoso and other MPC members advocate for comprehensive strategies to mitigate its effects and ensure sustainable economic growth.