The Central Bank of Nigeria (CBN) has expressed deep concern regarding the ongoing decline in economic activities within the country, citing various challenges including exchange rate pressures, inflation, and security issues.
The CBN Deputy Governor of Corporate Services, Bala Bello, highlighted these concerns in a statement published on the bank’s website. He emphasized that the country’s Composite Purchasing Managers’ Index (PMI) dropped significantly to 39.2 index points in February 2024, down from 48.5 index points in the previous month. This marked the eighth consecutive month of economic contraction.
According to Bello, the contraction in economic activity is primarily attributed to the impact of exchange rate pressures, rising input prices, security challenges, and other unique impediments. He stressed the importance of implementing nuanced policy decisions aimed at maintaining price stability to prevent further hindrance of economic activities and disruption of output performance.
Bello also expressed concern over the persistent inflationary trend despite the monetary policy rate hikes. He noted that both food and core inflation increased in February 2024, leading to a rise in headline inflation to 31.70 percent from 29.90 percent in the previous month. The continued inflationary pressure is attributed to high production costs, ongoing security challenges, and exchange rate fluctuations.
Highlighting the urgency of the situation, Bello stated that inflation further climbed to 33.22 percent in March, emphasizing the need for decisive and coordinated efforts to address this issue.
In response to these challenges, Bello acknowledged the Federal Government’s efforts to tackle food insecurity through initiatives such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming.
It is recalled that in March, the Monetary Policy Committee (MPC) of the CBN raised the country’s interest rate to 24.75 percent in an effort to address the prevailing economic challenges and manage inflationary pressures.
