The governor of the Central Bank of Nigeria, Godwin
Emefiele, said the steady increase in headline inflation from 15.60 per cent in
January to 20.77 per cent in September was consistent with global trends.
Emefiele said this at the 57th Annual Bankers Dinner,
organised by the Chartered Institute of Bankers Nigeria, on Friday, in Lagos.
The dinner had the theme, “Radical Responses to Abnormal
Episodes: Time for Innovative Decision-making” was appropriate and well-timed.
He also said headline inflation soared to 20.77 per cent in
September, indicating eight consecutive months of an uptick, and that the
upward momentum was after a successive period of decline in 2021, due to
balanced monetary policy actions.
He said upside pressure on consumer inflation re-emerged
during the year, as global conditions complicated existing local imbalances to
undermine price stability.
“Food remains the major component of the domestic consumer
price basket. The annualised uptick in headline inflation mirrors the 6.21
percentage points upsurge in food inflation to 23.34 per cent in September.
“During this period, core inflation also resumed an upward
movement from 13.87 per cent in January to 17.60 per cent.
“In addition to harsh global spillovers, exchange rate
adjustments and imported inflation; inflation was also driven by local factors
such as farmer-herder clashes in parts of the food belt region,” he said.
Emefiele said during the early part of 2020, the world
economy experienced the most significant downturn last witnessed since the
Great Depression following the outbreak of the COVID-19 pandemic.
He said the effect contracted global GDP by about 3.1 per
cent in 2020, and commodity prices went into a state of turmoil as the price of
crude oil plunged by over 70 per cent.
He said as the world struggled to recover to pre-pandemic
conditions, the global economy was yet again hit by another adverse occurrence
with the eruption of the Russian-Ukraine war.
He said the war, along with the sanctions placed on Russia
by the US and its allies, led to a spike in crude oil prices.
He said in an attempt to contain rising inflation, advanced
markets such as the US, began to increase their policy rates, which led to a
tightening of global financial market conditions along with a significant
outflow of funds from emerging markets.
“The subsequent strengthening of the US dollar further
aggravated inflationary pressures, along with a weakening of currencies, and
depletion of external reserves in many emerging market countries.
“Today close to 80 per cent of countries have reported
heightened inflationary pressures due to a confluence of some of the factors
mentioned above,” said Emefiele.
He explained that central banks in emerging markets and
developing economies, in a bid to contain rising inflation were also compelled
to raise rates, which was expected to lead to a tapering of global growth over
the next year.
“In fact, the short-term global growth projections by the
IMF have been downgraded three times in 2022 and are likely to be below the 3.2
per cent and 2.7 per cent estimates for 2022 and 2023, respectively.
“Average growth among advanced economies is projected to
plunge from 5.2 per cent in 2021 to 2.4 per cent in 2022 and 1.1 per cent in
2023.
“Estimated output growth in emerging markets, is expected to
slow from 6.6 per cent in 2021 to 3.7 per cent apiece in 2022 and 2023,” he
said.
He said in view of the food, energy, and cost-of-living
crises in many countries, there were growing restrictions on food exports from
many countries.
“As at the last count, about 23 countries, mainly in
advanced economies, according to the World Bank have banned the export of 33
food items. “Seven other countries have additionally implemented various
measures to limit food exports,” said Emefiele.
On currency redesign, Emefiele said, “Analysis of the key
challenges primarily indicated a significant hoarding of banknotes, as over 85
per cent of the currency in circulation were held outside the banking system.
“This is even as currency in circulation more than doubled
from N1.46 trillion in December 2015 to N3.23 trillion in September 2022; a
worrisome trend that must be curbed.”
He, therefore, said the policy would quicken the attainment
of a cashless economy as it was complemented by increased minting of the
eNaira.
According to him, the redesigned notes will also curtail currency
outside the banking system, and as the monetary policy becomes more effective,
it will help rein in inflation.
Earlier, Dr Ken Opara, CIBN president, commended Emefiele,
saying he had during the year, continued to be purposeful in curtaining economic
shocks from the aftermath of the fourth wave of the COVID-19 pandemic.
He commended him for keeping inflation and other related
economic indices, especially the naira, from distortions exacerbated by
declining production levels fueled by the high cost of production, insecurity,
dwindling government revenues, foreign exchange volatility and uncertainty in
the global oil market.
Opara said, “through the careful management of the Monetary
Policy Rate (MPR), the CBN continued to drive the recovery path of the Nigerian
economy through the expansion of credit to the real sector, guided management
of foreign reserves and promoting sound financial environment and monetary
policy.”
The Annual Bankers’ Dinner is a platform where stakeholders
of the banking community gather to reflect on the developments in the banking
industry and economy over the past year while gaining economic insights for the
year to come.
NAN
Click to signup for FREE news updates, latest information and hottest gists everyday
Advertise on NigerianEye.com to reach thousands of our daily users
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com