The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, has attributed the current surge in food prices nationwide to the federal government’s procurement and distribution of palliatives.
In the aftermath of President Bola Tinubu’s removal of fuel subsidy on May 29, 2023, the Federal Government allocated N5 billion to each state and the Federal Capital Territory (FCT) for the purchase of food items intended for distribution to the underprivileged.
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Cardoso voiced his concerns during the March Monetary Policy Committee (MPC) meeting, as documented on the CBN’s website. He highlighted that despite a hike in interest rates in February, inflationary pressures persisted.
He stated, “Despite noticeable stability in the foreign exchange market resulting from decisions taken at that 293rd MPC meeting, inflationary pressure remains unabated. While there is the argument that the significant tightening since the last MPC meeting is yet to fully permeate the system and yield its expected impact, the risk of galloping inflation persists.”
Cardoso emphasized that the government’s substantial purchases of food items for distribution as palliatives exacerbated food price inflation. He pointed out that this added another layer to inflation, compounded by seasonal factors such as price increases during religious fasting and festive periods.
Addressing the emerging sources of inflation, Cardoso stressed the importance of fiscal authorities complementing the efforts of monetary policy to address the issue effectively.
Echoing Cardoso’s sentiments, another MPC committee member, Bala Bello, highlighted the concerning rise in inflation, attributing it to high production costs, ongoing security challenges, and exchange rate pressures.
Bello commended the Federal Government’s initiatives aimed at tackling food insecurity, including the release of grains from strategic reserves, distribution of seeds and fertilizers, and support for dry season farming. He underscored the importance of decisive and coordinated efforts to curb inflation, given its adverse effects on citizens’ purchasing power, investment decisions, and overall economic performance.
