The World Bank and the International Monetary Fund (IMF) have called on the Central Bank of Nigeria (CBN) to remain steadfast in its efforts to control inflation.
Nigeria’s inflation rate increased to 34.8 percent in December, up from 33.6 percent in November.
During a panel session, World Bank’s Senior Economist for Nigeria, Sameer Matta, emphasized the importance of the CBN’s focus on curbing inflation. “It is critical to stay the course on inflation control. The central bank must continue to ensure that inflation is kept in check,” Matta stated.
He highlighted the need for improvements on the supply side, including enhancing agricultural yields and strengthening the link between rural and urban areas. He also suggested that trade policies should be reviewed to target specific sectors and adjust tariffs accordingly.
Matta pointed out that the cost of not implementing reforms is significant, with fuel and foreign exchange subsidies accounting for two percent each of Nigeria’s gross domestic product (GDP). “This amounts to five percent of GDP, which is extremely high,” he noted.
He likened the necessary reforms to tough medical decisions, emphasizing the importance of continuing social protection measures and accelerating cash transfer programs to support the most vulnerable.
Christian Ebeke, Nigeria’s country representative at the International Monetary Fund (IMF), reiterated the need for coordination between fiscal and monetary authorities to effectively combat inflation.
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He praised the commitment of both the central bank and fiscal authorities to strengthen coordination, which has helped reduce inflationary pressures. Ebeke also stressed the importance of addressing the distributional consequences of reforms, such as the removal of fuel subsidies and Naira reforms, to protect the most vulnerable populations. He highlighted the role of fiscal policies in complementing monetary efforts and the need for social protection measures.
He commended the CBN and fiscal authorities for their efforts to curb deficit monetization and improve financial conditions while emphasizing the importance of transparent liability management and the benefits of securitization in spreading out maturities.
The headline inflation rate in Nigeria experienced a slight increase, reaching 34.80% in December 2024, as reported by the National Bureau of Statistics. This marks a marginal rise of 0.20% from November 2024’s rate of 34.60%, primarily driven by the increased demand for goods and services during the festive season. In December 2024, the headline inflation rate of 34.80% was 5.87% higher than the rate recorded in December 2023, which stood at 28.92%. This year-on-year increase indicates a significant rise in the cost of living compared to the same month in the previous year.
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