Nigerians are bracing for a challenging festive season as inflation continues to worsen under President Bola Ahmed Tinubu’s administration, with headline inflation hitting 34.60% and food inflation skyrocketing to 39.93% in November.
Economists and financial analysts argue that the federal government’s interventions, including free train rides and monetary policies, are insufficient to address the country’s rising inflation. Instead, they suggest a stronger focus on fiscal measures.
This comes as the National Bureau of Statistics (NBS) revealed on Monday that inflation rose by 0.72% month-on-month in November, significantly up from 28.20% in the same period last year. Food inflation similarly increased from 39.19% to 39.93%, primarily driven by rising energy and transportation costs.
The federal government recently announced a two-week free train service to cushion the impact of high transportation costs during the holiday period. Minister of Information and National Orientation, Mohammed Idris, made this known after the Federal Executive Council meeting on Monday.
Experts React to Rising Inflation and Government Efforts
Prof. Segun Ajibola, former President of the Chartered Institute of Bankers, criticized the government’s reliance on monetary interventions, describing them as ineffective. He argued that inflation is being misdiagnosed, leading to flawed solutions.
According to him:
“The solutions to Nigeria’s inflationary problem lie more in fiscal measures, not in the Central Bank’s contractionary monetary stance. The fiscal authorities must address production costs, ease of doing business, and other challenges affecting businesses.”
Ajibola added that the purchasing power of Nigerians will erode further during the festive season, with government initiatives like free train rides offering minimal relief.
“Less than 1% of Nigerians have access to train services. More meaningful fiscal retooling is required, alongside less reliance on rate hikes by the CBN,” he said.
Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), echoed similar sentiments, calling for a shift towards fiscal policy solutions. He stressed the need for measures such as transportation subsidies, tax waivers, and reductions in production costs.
Yusuf explained:
“The persistent inflation pressures are extremely worrisome as they erode purchasing power and worsen the welfare of citizens. Monetary policies alone are insufficient; we need complementary fiscal interventions to address production and transportation challenges.”
He also highlighted the importance of addressing energy costs, exchange rate volatility, and insecurity, which have negatively impacted agriculture and other sectors.
Free Train Services: A Step in the Right Direction?
While commending the federal government’s free train service initiative, Yusuf emphasized the need for sustainable and broader subsidies.
“It’s a good step, but we need more lasting interventions across critical sectors like agriculture, health, education, and public transportation. In many countries, government-subsidized services bring relief to citizens. Nigeria must adopt similar strategies to reduce the pressure on households.”
He stressed that short-term measures like the free train rides must evolve into broader, long-term solutions to truly ease the burden on Nigerians.
CBN’s Monetary Policies: Limited Impact on Inflation
The Central Bank of Nigeria (CBN), under Governor Olayemi Cardoso, has maintained a contractionary monetary stance, consistently raising interest rates to curb inflation. The most recent hike in November saw interest rates increased to 27.50%, up from 27.25%.
However, analysts argue that these policies have not significantly impacted inflation, highlighting the limitations of monetary measures without complementary fiscal policies.
The Outlook for Nigerians
As inflation rises and the cost of food, energy, and transportation remains high, experts warn that Nigerians will face continued economic hardship unless fiscal measures are prioritized to tackle the root causes of inflation. With the festive season approaching, the burden on households is expected to worsen despite government interventions.
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