A member of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), Muhammad Abdullahi, has raised concerns over the persistent impact of imported inflation on domestic price stability. His warning comes amid the Federal Government’s plan to import food items as part of efforts to achieve food sufficiency across the country.
Abdullahi noted that Nigeria’s heavy reliance on imported goods has made the economy highly vulnerable to global price fluctuations and exchange rate volatility, significantly complicating efforts to curb inflation. He pointed out that the country’s inflation rate surged to 34.80 percent in January 2025, a development he attributed in part to external price pressures.
In a personal statement following the MPC’s 298th meeting, where a majority of members voted for a 25-basis-point interest rate hike to 27.5 percent, the CBN deputy governor emphasized that domestic supply-side constraints continue to exacerbate inflationary pressures. He highlighted how insecurity in food-producing regions, poor transportation infrastructure, and inadequate storage facilities have disrupted food supply chains, leading to higher costs.
Abdullahi explained that despite previous interest rate hikes and complementary monetary policies, key inflationary drivers remain unresolved, necessitating a more comprehensive approach that combines fiscal, monetary, and structural policies. He stressed that imported inflation, driven by global price increases in essential goods such as wheat, refined petroleum products, and fertilizers, is exerting additional pressure on the Nigerian economy.
He further identified rising fuel prices as a major factor contributing to core inflation, as increased costs of Premium Motor Spirit (PMS) and other energy sources have significantly raised transport and logistics expenses. These cost hikes have, in turn, worsened headline inflation, affecting both businesses and households.
To mitigate inflationary pressures, Abdullahi called for targeted investments in key infrastructure, particularly in the areas of transportation and storage for food and other agricultural products. He emphasized that reducing supply chain bottlenecks and transportation costs would help lower food prices, while addressing core inflation would require policies aimed at stabilizing energy costs. He also expressed optimism that current efforts to expand domestic refining capacity could reduce Nigeria’s dependence on imported refined petroleum products, ultimately easing foreign exchange pressures and stabilizing the naira.
Adding to the discussion, another MPC member, Philip Ikeazor, highlighted concerns over Nigeria’s import structure, noting that the concentration of imports in the non-productive sector continues to place undue pressure on foreign exchange reserves. He revealed that in the second quarter of 2024 alone, Nigeria’s importation of Premium Motor Spirit and gas accounted for $2.821 billion of the country’s top 10 imports, despite government efforts to reduce import dependence and strengthen the naira.
Ikeazor noted that while this figure marked a slight decline from $2.922 billion in the first quarter of 2024, it still reflected significant foreign exchange demand pressures, diverting resources away from the productive sector. He warned that unless measures are taken to realign foreign exchange utilization toward productive investments, the nation’s currency and economic stability could remain under threat.
The ongoing challenges posed by both imported inflation and domestic structural inefficiencies have reinforced calls for a multi-faceted policy approach. Experts argue that while monetary tightening can help control inflation in the short term, long-term stability will depend on deeper fiscal and structural reforms aimed at enhancing domestic production capacity and reducing Nigeria’s exposure to external economic shocks.
