The Central Bank of Nigeria (CBN) has expressed deep concerns regarding the downturn in economic activities within the country. Bala Moh’d Bello, the CBN deputy governor of Corporate Services, conveyed this apprehension in his recent statement following the Monetary Policy Committee meeting. He highlighted a significant drop in the Composite Purchasing Managers’ Index (PMI) to 39.2 index points in February 2024, down from 48.5 index points the previous month.
Bello emphasized that economic activity has been contracting for eight consecutive months, attributing this decline to various factors including exchange rate pressures, inflation, and security challenges. He underscored the importance of nuanced policy decisions aimed at maintaining price stability to prevent further hindrance to economic activities and disruption of output performance.
Of particular concern is the upward trend in inflation despite sustained increases in the monetary policy rate, with forecasts indicating further price hikes in the near future. Both food and core inflation rose in February 2024, contributing to a surge in headline inflation to 31.70 per cent from 29.90 per cent in the previous month. Bello attributed this continued inflationary pressure to elevated production costs, persistent security challenges, and exchange rate fluctuations.
Furthermore, Bello noted a significant escalation in inflation to 33.22 per cent in March, which he deemed unacceptably high and requiring coordinated efforts to address. He stressed the adverse effects of high inflation on citizens’ purchasing power, investment decisions, and overall output performance. Bello commended the Federal Government’s initiatives aimed at addressing food insecurity, such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming.
Recall that in March, the Monetary Policy Committee raised the country’s interest rate to 24.75 per cent in response to these economic challenges.