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By Omodele Adigun
As galloping inflation continues to bite harder, experts have charged the Federal Government and the Central Bank of Nigeria (CBN) to collaborate in order to stem high cost of living and reduce unemployment rate in the country.
This was one of the recommendations contained in the Communique issued by the monetary and financial experts at the end of a recent Monetary Policy Committee (MPC) meeting of CBN in Abuja.
The MPC met on July 24 and 25, 2023, against the backdrop of continued uncertainties in the global and domestic economies.
The 11 MPC members noted that “global Inflation is expected to remain elevated through 2023, despite broad measures by several central banks to ease the pressure
On the domestic front, they argued that ‘output growth continued at a moderate pace, while the general price level remained elevated as markets adjust to the new policies introduced by the Federal Government. Consequently, these developments at both the global and domestic levels continue to pose significant challenges to the policy environment.’
The experts noted that ‘Key developments that would likely sustain upward pressure on domestic prices, in the short to medium term, are the recent deregulation of petrol price and the transition to a unified and market-determined exchange rate.
They added that legacy headwinds such as the war in Ukraine and slow recovery of the Chinese economy as well as ongoing bricsification are key downside risks to output growth. In the domestic economy, factors precipitating the uncertainties remain the continued insecurity, particularly in farming communities; high prices of PMS and other energy products; as well as pressure in the foreign exchange market.
The Committee’s considerations focused on the persistent rise in inflation and its potential adverse effect on output growth and household income. The continued uptick in inflation (month on month), driven by increase in both the food and core components of the CPI, in the view of members, remained a key challenge.
The members posited that the unfolding dynamics in the policy environment and the resultant pass-through to domestic prices would thus require greater collaboration between the apex bank and the fiscal authority(Federal Government).
