The Central Bank of Nigeria (CBN) has been urged by the World Bank and the International Monetary Fund (IMF) to continue its unwavering approach to managing inflation.
Nigeria’s rate of inflation rose from 33.6 percent in November to 34.8 percent in December.
World Bank Senior Economist for Nigeria Sameer Matta stressed the significance of the CBN’s emphasis on reducing inflation during a panel discussion. “It is imperative to continue with the inflation control strategy. In order to control inflation, the central bank must keep up its efforts,” Matta said.
He emphasized the need to deepen the connection between rural and urban areas and increase agricultural yields as well as make improvements on the supply side. In order to target certain industries and modify tariffs appropriately, he also recommended that trade regulations be examined.
Matta emphasized that the costs of not enacting reforms are high, since fuel and foreign exchange subsidies make up 2% of Nigeria’s GDP each.
“This is a very high amount—five percent of GDP,” he stated.
He compared the necessary reforms to difficult medical decisions, stressing the need to speed up cash transfer programs and maintain social protection measures to help the most disadvantaged.
Fiscal and monetary authorities working together
The International Monetary Fund (IMF) country representative for Nigeria, Christian Ebeke, reaffirmed the necessity of collaboration between monetary and fiscal authorities in order to successfully fight inflation.
He commended the fiscal authorities’ and the central bank’s dedication to improving cooperation, which has assisted in lowering inflationary pressures.
Ebeke emphasized that in order to safeguard the most disadvantaged groups, it is crucial to address the distributional effects of changes like the elimination of gasoline subsidies and Naira reforms. He emphasized how fiscal policies support monetary efforts and the necessity of social safety nets.
He emphasized the value of open liability management, the advantages of securitization in spreading out maturities, and the achievements of the CBN and fiscal authorities in reducing deficit monetization and enhancing financial conditions.
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The headline inflation rate in Nigeria increased little, according to the National Bureau of Statistics, and reached 34.80% in December 2024.
The higher demand for products and services over the holiday season is the main driver of this slight increase of 0.20% from the rate of 34.60% in November 2024.
Compared to the headline inflation rate of 28.92% in December 2023, the rate in December 2024 was 5.87% higher at 34.80%.
This annual increase suggests that the expense of living has significantly increased when compared to the same month last year.
