With the aftermath of the Federal Government’s naira redesign policy, the National Bureau of Statistics (NBS) has reported that Nigeria’s inflation rate climbed to a 17-year-high rate of 21.91 percent year-on-year in February 2023. The figure is a 0.09 percent increase compared to 21.82 percent in January 2023. The NBS disclosed this in its Consumer Price Index (CPI) report published on its website on March 15, 2023. The increase in rising figures is fueled by the new naira note scarcity and uncertainties relating to the presidential election.
The NBS disclosed that the food inflation rate, which is a significant factor in overall figures, rose to 24.35 percent year-on-year in February 2023. This represents a 7.24 percent rise from the 17.11 percent rate recorded in February 2022. The NBS also added in the report that the surge in food prices resulted from elevated prices of different food items. These include oil and fat, bread and cereals, potatoes, yam and other tubers, fish, fruits, meat, vegetables, and other food products.
Electronic transactions contribute to rising costs.
After the new naira redesign policy kicked off in earnest in January 2023, the public resorted to using electronic means of payments, such as POS and transfer, though this came into effect slowly. People were reluctant in adopting it because of the difficulties that come with using it. Some market men and women are not technologically savvy, so they may not know how to verify that money has been sent to their account. Many of them do not even have a bank account.
Those who have bank accounts have to deal with delay in being alerted by the bank and charges. Because of this, traders at varying levels adopted a unanimous principle of asking that their customers add whatever charges that the bank would deduct from them. Also, where cash is really scarce, the few who support electronic means of payment exploit the situation by virtue of allowing the customers to make electronic transfers to them.
Rise in costs causing headaches for the CBN in the coming weeks or months.
The inflation figures are expected to feature prominently in the upcoming meeting of the Central Bank of Nigeria (CBN)’s Monetary Policy Committee, which is scheduled for March 20, and March 21, 2023. In its defense of the naira redesign policy, the CBN said it is expected to control the inflation in the market as less cash in people’s hands reduces currency outside banks and money circulation. The governor of CBN, Godwin Emefiele, reiterated that the accompanying decline in the money supply would slow the pace.
He further stated that the country has started to see inflation trending downwards following general price stability in almost all market genres, including for goods and financial products. With the latest figure showing the opposite of CBN’s promise and the supreme court judgment cancelling the policy, the CBN will now need to devise a strategy to address the inflation challenge. It is expected that the CBN will decide on the cost of loans as its next move to fight these increases.
CBN governor lifts the ban on spending old notes.
Meanwhile, Mr. Emefiele in a press conference has lifted the ban on transacting with old 500 and 1000 naira notes as a legal tender in the country. The new policy is that these old notes are legally acceptable until December 31, 2023. As these old notes are released back into circulation, the exorbitant charges by POS vendors and market people will significantly reduce because more people now have access to cash. Hopefully, this also helps in reducing the inflation on food items in the market.
Related Link
National Bureau of Statistics: Website
Naira crisis drives 17-year-high inflation – CBN to devise a strategy to address the inflation challenge. – Express your point of view.
Although the Naira redesign really affect so many things and people across the country but it also help with something’s like criminal act reduction.
The monetary system and bank charges has twinkled down to the point that when you want to make payment for items purchased through the POS or by transfer you will have to add charges; even if it is N200 you bought the item. Coupled with this fact is the bank network glitches during transfer or POS. These have contributed to the difficulty of adopting the cashless policy. CBN need to review the monetary system, make it easy to get the POS machine at an affordable price especially for the pepper sellers etc.
The redesign policy might also decrease inflation has the CBN intends but we the people are the one bearing the consequences and it is nearly unbearable.
Inflation is just rising on a continuous basis in Nigeria. No effective measure or control is helping the situation. I wonder what will happen in the next few years.
The CBN will need to come up with a plan in order to combat the problem of rising prices at this point. It’s devastating effect is telling on the people too much.
Its really delirious that the depreciation of new naira notes and the unpredictability of the outcome of the presidential election are msjor reasons that have contributed to the rise.
This new difficulty, brought on by the collapse of the naira, would make market people substantially less numerous because an increased number of individuals now have access to cash.
The inflation rate in Nigeria is getting worse everyday, thus naira scarcity is doing more harm than good to the inflation rate
It will be better if the government does something to this inflation rate, it’s becoming unbearable for people to live in this kind of economy
The new naira note scarcity and election-related uncertainty are what are causing the rising numbers to rise. The redesign of the naira was intended to lower inflation, but it was poorly carried out.
The issue of Naira crises has done lots of harm to people and the business because Nigerians are used to be money around even when it is not needed but political are worse.But the major issue that really cause the problem is inability of banks to make their internet banking system function at minimum capacity.
Inflation actually got decrease as plan to decrease it but the redesign of the note did some good and change something that we are suffering from but we actual suffer from it also the cashless policy need to be implement in a good and right way
Inflation in the country is very high that will need to decrease it, it make people suffer a lot in this country strategy to curb the inflation rate in the country
The CBNneed to look another strategy to address the inflation challenge. The redesign of naira wasn’t cool at all. I’m happy the decision to lift the ban on old note was made.
Inflation has been on the rise for a long time now, and there seem yo be no effective measure put in place to combat it. We need to be looking at ways to drastically bring down the inflation rate.
Many were hesitant to accept this electronic transfer thing due to the challenges associated with utilizing it; hence, i feel it should not be overly complex but rather easy to use.
This is great because since more individuals now have cash at their disposal, and the government acts quickly to reduce the outrageous prices charged by POS sellers and market vendors.
The cashless policy would have helped in addressing the issues on inflation but nothing was done in preparation towards the introduction of this policy. The bank charges are outrageous and directly affecting the use of POS and fund transfer after purchase of items. The buyer is forced to add charges that will be deducted by banks after purchase of items. Therefore, bank monetary policy should be review. Addendum, the network problem is not helpful. The banking network system are too poor and should be upgraded for effective service.
This naira crises really affected the nation and the economy. It has lead to inflation too, is just unfortunate. It is quite somehow that money is not in circulation and still there is inflation.
The issue of low cash in circulation is too bad. This policy is never a good policy on Nigerians. The decision was very poor. The banking system network for transfer is over poor