Nigeria’s January 2024 Inflation Surge and Currency Challenges
Nigeria experienced a significant surge in headline inflation, escalating from nearly one percent to 29.9% in January 2024, marking an 8.08 percentage points increase compared to the same month in 2023, according to the National Bureau of Statistics (NBS).
Rising prices of essentials like bread, cereals, edible oils, potatoes, and meat are causing the inflationary pressure. Analysts point to the depreciation of the local currency, the naira, against major currencies, particularly the U.S. dollar, as the primary driver behind the inflationary trend. Since the departure of former Central Bank of Nigeria Governor Godwin Emefiele, the naira has depreciated by over 50%, largely due to U.S. dollar shortages in the formal foreign exchange market.
To curb the naira’s decline, the Central Bank of Nigeria (CBN) has implemented various measures, including discouraging foreign exchange sourcing or trading on the parallel market. Recently, the CBN unveiled additional foreign exchange control measures, mandating electronic channels for the payout of personal and business travel allowances (PTA/BTA), eliminating cash transactions. In a parallel move, the CBN introduced new prerequisites for international oil companies seeking to repatriate funds offshore, emphasizing compliance with these conditions before approving fund transfers. These measures underscore the CBN’s commitment to transparency, stability, and preventing foreign exchange malpractices in the Nigerian market.
Clever Robot News Desk 19th February 2024
