Muhammad Abdullahi, a member of Nigeria’s Central Bank Monetary Policy Committee (MPC), highlighted the challenges posed by imported inflation on the nation’s price stability. Imported inflation, especially concerning food products, remains a significant hurdle for the government’s efforts to control inflation, which reached 34.80% in January 2025. Abdullahi emphasized Nigeria’s reliance on imported goods, which exposes the economy to global price fluctuations and exchange rate changes.
Abdullahi’s statement, issued after the 298th MPC meeting, pointed to various domestic supply constraints exacerbating inflation. He cited insecurity in agricultural regions, which hinders food production and drives up prices. The inadequate transportation and storage infrastructure for agricultural goods also worsens the situation, leading to spoilage and higher costs, further contributing to inflationary pressures.
External factors, particularly global price hikes for essential imports like wheat, refined petroleum, and fertilizers, are key contributors to Nigeria’s inflation woes. Abdullahi noted that the increasing costs of these imports are severely impacting domestic prices, further pressuring the economy. The rise in core inflation, partly driven by the increasing cost of energy, particularly Premium Motor Spirit (PMS), has contributed to higher transportation and logistics costs, escalating overall inflation.
Abdullahi stressed the need for a comprehensive, multi-faceted approach to control inflation. While monetary tightening measures are essential, he emphasized that they need to be accompanied by fiscal and structural policies. Addressing supply-side issues, such as infrastructure investment and mitigating the rising costs of energy, are necessary for managing inflation in the long term. Abdullahi also called for targeted investments in food transportation and storage to address food inflation specifically.
Another MPC member, Philip Ikeazor, voiced concerns over Nigeria’s heavy reliance on imports in the non-productive sector, which continues to place pressure on foreign exchange reserves. He pointed out that imports of Premium Motor Spirit and gas accounted for a significant portion of Nigeria’s foreign exchange expenditure in Q2 2024, reflecting a mismatch between foreign exchange demand and supply. This mismatch continues to undermine efforts to stabilize the local currency and hinder growth in the productive sector.
Source: PUNCH