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A member of the Central Bank of Nigeria’s Monetary Policy Committee, Muhammad Abdullahi, has emphasised the significant challenge posed by imported inflation to the price stability of domestic products. This concern arises amid the Federal Government’s plan to import food items to achieve food sufficiency nationwide.

“Imported food inflation is affecting the government’s plan to tame the rising inflation that reached 34.80 percent in January 2025,” Abdullahi noted. He attributed Nigeria’s vulnerability to fluctuations in global prices and exchange rate movements to the country’s dependence on imported goods.

In his personal statement following the 298th MPC meeting, Abdullahi stressed that “despite previous rate hikes and complementary measures, the key drivers of inflation persist, demanding a multifaceted approach that combines monetary and structural policy actions.”

He identified several factors contributing to the complex inflationary environment, including domestic supply-side constraints and external factors such as imported inflation. Abdullahi emphasised the need for a multi-pronged approach to tackle inflation, integrating fiscal, monetary, and structural policies.

“To effectively tackle inflation, a multipronged approach that integrates fiscal, monetary, and structural policies is essential,” Abdullahi said. He also called for targeted investments in transportation and storage infrastructure for food and other agricultural products to reduce supply chain bottlenecks and transportation costs.

Another committee member, Philip Ikeazor, highlighted the mismatch between foreign exchange demand and supply, citing the significant pressure on foreign exchange utilisation due to the importation of Premium Motor Spirit and gas. 

“In terms of demand pressure on foreign exchange, the concentration of imports in the nonproductive sector reflects a mismatch between foreign exchange demand and supply,” Ikeazor noted.
“Although this represents a decline from $2.922bn in Q1-2024, it still amounts to significant pressure on the utilisation of foreign exchange and crowds out the productive sector that could have been a potential source of foreign exchange supply.”

Ikeazor emphasised the need for a more balanced approach to foreign exchange management, stating that “the current dynamics of the foreign exchange market, with its attendant implications for the naira exchange rate, underscores the need for a more nuanced approach to foreign exchange management, one that balances the competing demands of different sectors of the economy.”

Meanwhile, Abdullahi reiterated the importance of addressing the underlying causes of inflation, saying “to address food inflation specifically, targeted investments in transportation and storage infrastructure for food and other agricultural products are critical. Reducing supply chain bottlenecks and transportation costs will thus help lower food prices.”

He also expressed optimism about the potential impact of current initiatives to enhance domestic refining capacity, stating that “current initiatives to enhance domestic refining capacity are expected to reduce the reliance on imported refined petroleum products, thereby mitigating the pass-through effects of prior shocks and stabilising the local currency.”

Overall, the MPC members emphasised the need for a multi-faceted approach to addressing the challenges facing the Nigerian economy, including inflation, foreign exchange management, and economic growth.

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