The economy of Nigeria is being held by the jugular by many problems, but inflation stands tall among them all.
You see, the hydra-headed problem has refused to be bothered by the various policies the Central Bank of Nigeria is implementing to tame it.
In fact, inflation in Nigeria is growing higher month after months. Currently it stands at 33.2% the highest Nigerian has ever witnessed.
To solve this inflation problem the governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, has called for a collaborative effort to address this situation.
The CBN governor called on the fiscal authorities to complement the efforts of monetary policy in addressing the new sources of inflationary pressures.
Drivers Of Rising Cost Of Living
This collaboration between stakeholders will help the country achieve price stability.
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The need for collaborative efforts between monetary and fiscal authorities to address the multifaceted inflationary pressures was explained by the CBN governor.
Worried about the persistence of inflationary pressures despite efforts to stabilise the FX market.
Cardoso spoke on the risk of escalating inflation and x-rayed the need for decisive action to prevent hyperinflation pressure.
Although monetary factors contributing to inflation are diminishing, structural issues such as increases in food and energy prices continue to drive inflation.
New Sources Of Inflation
He also said this menace had new sources, including ‘seller inflation’ and government purchases for distribution as palliatives.
“In addition, huge purchases by the government for distribution as palliatives to vulnerable citizenry is adding another dimension to the food price inflation.
“Seasonal factors of food price increases during religious fasting and festive periods, contribute to this problem.”
“These new sources of inflation can be addressed by fiscal authorities to aid the efforts of monetary policy gain price stability.”
Tackle Inflation And Ensure Price Stability
Similarly, Emem Usoro, a member of the MPC, urged fiscal authorities to collaborate closely with monetary policymakers to address inflationary pressures.
This includes implementing measures to tackle structural factors contributing to inflation, such as issues in commodity markets and managing price fluctuations during religious and festive periods.
Furthermore, fiscal policies and monetary efforts should aim to anchor inflationary expectations and promote overall price stability in the economy.
“From the foregoing, it is obvious that the continuous rise in prices of things, is detrimental to the broad recovery of the economy,” Nkom argued.
“While the rise can be attributed to both monetary and structural factors, unwavering collaboration between the monetary and fiscal authorities is essential.
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“As this will be effective in combating upward price movement and restore macroeconomic equilibrium.
“Monetary policy must thus focus on two key issues: moderating monetary demand and stabilizing the exchange rate.” Nkom submitted.
