In its second-quarter economic outlook, the Central Bank of Nigeria (CBN) has provided insights into the prevailing inflationary pressures, indicating that they may persist in the near term.
The apex bank highlighted various factors contributing to the heightened inflation, shedding light on the complexities of the economic landscape.
The removal of fuel subsidies, coupled with the depreciation of the naira, is identified as a significant factor likely to sustain inflation in the short term.
The anticipated upward review of wages and electricity tariffs, along with the adverse effects of climate change on agricultural activities, are also expected to contribute to continued inflationary pressures, according to the CBN.
The bank stated, “Inflationary pressures may subsist in the near-term on account of the removal of fuel subsidies and subsequent higher prices of premium motor spirit, and the depreciation of the naira. Moreover, the anticipated upward review of wages and electricity tariffs, alongside the adverse effects of climate change on agricultural output, are likely to induce further inflationary pressures.”
Despite these challenges, the CBN introduced a note of optimism, highlighting that tight monetary policies and improvements in global supply chains are anticipated to act as mitigating factors, slowing down the inflation rate in the future.
The bank noted, “Notwithstanding, the sustained tight monetary policy stance, coupled with improvements in global supply chains, are both expected to help dampen inflation.”
This nuanced analysis from the CBN provides a comprehensive understanding of the factors influencing inflation in the Nigerian economic landscape, offering valuable insights into the measures and conditions that may impact inflation rates in the foreseeable future.