The Central Bank of Nigeria (CBN) has sounded the alarm over a sharp decline in economic activities across the country. According to a statement published on the bank’s website by Deputy Governor of Corporate Services Bala Bello, Nigeria’s Composite Purchasing Managers’ Index (PMI) plummeted to 39.2 index points in February 2024, down significantly from 48.5 index points in the previous month.
Bello noted that economic activity has been contracting for eight consecutive months due to a confluence of factors, including exchange rate pressures, rising inflation, security challenges, and other headwinds. “This calls for well-nuanced policy decisions targeted at price stability to forestall stifling economic activities and derailing output performance,” he stated.
Of particular concern is the upward inflationary trend, despite sustained hikes in the monetary policy rate. Both food and core inflation rose in February, driving headline inflation to an alarming 31.70 percent, up from 29.90 percent in the previous month. The CBN forecasts further price increases in the near term.
“This continued rise in inflation was mainly due to high production costs, lingering security challenges, and exchange rate pressures,” Bello explained. He added that inflation soared to an unacceptable 33.22 percent in March, necessitating decisive and coordinated efforts to curb it given the adverse impact on citizens’ purchasing power, investment decisions, and overall output performance.
While commending the Federal Government’s initiatives to address food insecurity, such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, Bello emphasized the need for concerted action to tackle the multifaceted economic challenges.
In a bid to rein in inflation, the Monetary Policy Committee raised the country’s interest rate to 24.75 percent in March.