INFLATION: INVESTMENT IN FOOD STORAGE INFRASTRUCTURE IS CRUCIAL — CBN
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Members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria, CBN, have identified investment in food storage facilities, development of policies to tackle supply-side constraints, among other things as crucial to addressing inflation.
They disclosed this in their personal statements over the February 2025 MPC meeting and Communique.
In his personal statement, a member of the Committee, Aku Odinkemelu, who is also an independent non-executive board member at Nord Oil APS & Energy Services, said: “The decision to rebase inflation from the 2009 base year to 2024 further supports my long standing argument that Nigeria’s inflation is largely structural. I have consistently maintained that the country’s persistent inflation stems primarily from supply-side constraints in critical sectors such as agriculture, infrastructure, and oil.
“The rebased inflation measure, which assigns greater weight to core inflation, underscores this reality. Core inflation—driven by transportation, housing, healthcare, and electricity costs — remains persistent and is less responsive to monetary policy interventions.
“While I acknowledge that food inflation serves as a key predictor of overall inflation, recalibrating the inflation measure to place greater emphasis on core inflation more accurately reflects the evolving structure of the Nigerian economy.
“This approach effectively highlights the fundamental drivers of inflation. In the light of these insights, the CBN should continue to work on enhanced coordination with the fiscal authority to develop policies that address supply-side shocks and mitigate structural inflationary pressures.”
On his part, Deputy Governor, Economic Policy Directorate, CBN, Muhammad Abdullahi, said that investment in transportation and storage infrastructure for food and other agricultural products are crucial to lowering food prices and addressing food inflation.
He stated: “As in previous statements, let me reiterate that targeted investments in transportation and storage infrastructure for food and other agricultural products are crucial to lowering food prices and addressing food inflation. As observed in recent weeks, improved refining capacity has led to a significant decrease in petrol prices and a reduction in fuel imports.
“Moving forward, these developments are expected to support the sustainability of inflation reductions, particularly considering the rebased CPI, as well as help mitigate potential risks from fluctuations in food and energy prices.”
Another MPC member, Aloysius Ordu, noted that the gradual easing of global inflation and increased foreign investment into non-oil sectors present opportunities for sustained growth.
Ordu who is a Non-resident senior fellow at Africa Growth Initiative in the Global Economy and Development program at Brookings, added: “Continued monitoring of global developments, proactive monetary and fiscal policies, and structural reforms will be critical to ensuring long-term economic stability and competitiveness in the face of evolving global challenges.”
Another member of the CBN’s MPC, Bandele Amoo, hoped that the implementation of 2023 Electricity Act will further moderate inflation. He said that the marked decline in the inflation rate after the re-basing exercise underscores a shift in real interest rates into positive territory.
Amoo who is also the Managing Director at EcoDonini Solutions Ltd, stated: “It is hoped that when the government facilitate the efficient implementation of the 2023 Electricity Act to tackle electricity infrastructure deficit in Nigeria, it will systematically moderate inflation further.”
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