Inflation, the Central Bank, and the Federal Government, By Uddin Ifeanyi

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The headline inflation numbers for April did not cease to provide cause for worry — up to 33.69 per cent on an annual basis, and a wee bit higher than the 33.20 per cent at which the consumer price index closed in March. The hole in consumers’ pockets from the depredation of rising prices continues, therefore, to grow bigger. And as the Central Bank of Nigeria continues to raise interest rates in its bid to rein inflation in, the drag on business investment is that much heavier.

It matters no less that food, a large part of the basket of goods with which domestic price movements are computed, is still problematic. At 40.53 per cent year-on-year last month, key components of the food basket were up in the month, as they were in March, when the food index rose by 40.01 per cent.

In the face of all these, it is difficult to ignore a further salience of the ongoing discussion around relentlessly rising domestic prices. Monetary policy tools — the Central Bank’s policy rate and its interventions in the bond markets — are blunt force instruments. This is the reason most commentators on the wrong side of the Central Bank of Nigeria’s current round of monetary tightening have likened its response to a carpenter for whom every problem is a nail waiting to be hammered.

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