Inflation: Tightening monetary rates yielding desired effect, says CBN

Isa AbdulMumin, director of corporate communications at the Central Bank of Nigeria (CBN), says he believes that the low rate of inflation growth in October 2023 compared to September 2023 is a result of the bank’s monetary policy stance of tightening rates.

AbdulMumin spoke to journalists on Wednesday on the latest inflation rate.

Earlier today, the National Bureau of Statistics (NBS) released a report on the consumer price index (CPI), which measures the rate of change in prices of goods and services.

According to the report, CPI also known as inflation, rose to 27.33 percent in October 2023 — up from 26.72 percent in the previous month.

On a month-on-month basis, inflation in October 2023, stood at 1.73 percent, 0.37 percent lower than the rate recorded in September 2023.

Commenting on the report, AbdulMumin said the low rate of increase in October 2023 compared to September 2023, is a result of the bank’s monetary policy stance to tighten rates.

He added that the apex bank’s money market reforms were yielding the desired effect.

“Aggressive monetary tightening using various liquidity mechanisms including removing the cap on the standing deposit facility (SDF) and open market operations had raised open buy back (OBB) rates from less than 1 percent in August to their expected levels around the monetary policy rate today,” he said.

“In spite of 0.61 percent increase in the headline inflation rate from 26.72 percent in September 2023 to 27.33 percent in October 2023.”

According to AbdulMumin, available statistics “showed that the first indication of deceleration in prices was recorded in September and further reforms in the money market, which commenced in October, had accelerated easing in prices as indicated by the substantial drop in month-on-month changes recorded in October”.

He said: “Moderation in month-on-month changes in prices observed in the headline, food and core components of the consumer basket followed reforms in the money market and relative stability in the FX market.”

AbdulMumin further expressed optimism that the CBN was headed in the desired direction in terms of achieving price stability.