Nigeria’s annual inflation rose to a new 28-year high of 33.95% in May, official data showed, worsening hardships that have fuelled public anger against President Bola Tinubu’s economic reforms. The rise in inflation has also shown that the Central Bank of Nigeria’s Monetary policy has so far proved ineffective in curtailing the inflation menace. The CBN instead of thinking out of the box has focussed on chasing unseen enemies in the system by unwarranted lay off of staff even at the level of directors that would have guided the new management on policy direction to save the economy. The CBN management instead of consulting with staff with institutional knowledge why the exchange rate was the way it was, embarked on a journey of single exchange rate that has almost collapsed the economy. The apex bank at the last count had sacked no fewer than 200 officials. This is in addition to the long list of ongoing disengagements in the apex bank. This adds to the list of 117 staff sacked by the bank between March 15 and April 11, 2024.The termination of appointments affects directors, deputy directors, assistant directors, principal managers, senior managers and lower-ranking staff.
The CBN in its last Monetary Policy Committee (MPC) session held on May 20-21, 2024, resolved to hike the monetary policy rate by 150 basis points, elevating it to 26.25% from the previous 24.75%. This decision the CBN claimed was aimed to address the ongoing inflationary and exchange rate pressures and stabilise the economy. The MPC’s decision to raise the interest rate was driven by the persistent rise in inflation, fuelled by higher food and energy costs due to renewed exchange rate pressures. The Committee expressed concerns about the inflationary impact on household incomes and the overall economy, reiterating the need for a tighter monetary stance to rein in price increases. The Committee also emphasised the elevated price pressure risks, especially for food, which will increase near-term inflation. Inflation rose to 33.69 per cent in April 2024, 11.74 percentage points higher than 22.22 per cent in April 2023, highlighting sustained inflationary pressures. Upward price pressures widen the inflation-interest rate gap, keeping real returns on investments negative. But this the 19th straight month that inflation has risen, up from 33.69 pert cent. Price pressures have been spurred by Tinubu’s reforms, chiefly slashing petrol and electricity subsidies and devaluing the Naira currency twice within a year.
Labour unions, which suspend a strike called to demand a new minimum wage, have argued that the reforms hurt the poor and have left millions grappling with the worst cost-of-living crisis in decades. Data published by the National Bureau of Statistics showed food and non-alcoholic beverages continued to be the biggest contributor to inflation in May. Food inflation, which accounts for the bulk of Nigeria’s inflation basket, rose to 40.66 per cent from 40.53 per cent the previous month. High food prices and a weaker Naira are the main drivers of inflation in Nigeria, analysts say. The central bank had raised interest rates in May for the third time this year in response to the continued rise in inflation. Governor Olayemi Cardoso has indicated that rates will stay high for as long as necessary to bring inflation down meaning that the current management of CBN has exhausted its policy on inflation. This means that Nigerians will continue to wallow in poverty and hunger as long as the CBN is groping in the dark in matter of economic management
