Nigeria’s headline inflation increased sharply to 18.17% in March, the highest level since January 2017. It is also the 19th consecutive monthly increase. The continued rise in the general price level suggests that price inflation is not transient but now more persistent. The major inflation stoking factors range from higher costs of refined petroleum products (12.07%) to an exchange rate pass through to consumers and the impact of high-powered money with a shorter transmission time lag into the markets. Also, the decline in imported raw materials due to forex rationing is forcing manufacturers to look inwards for local substitutes, reducing the supply of commodities to retail markets.
This time around, all the various inflation baskets deteriorated. This shows that the impact of government interventions is falling far short of expectations in spurring output. It also reveals that money supply growth (1.41%) is compounding the demand-pull effect on the general price level. Total agric intervention was N1.487trn (0.78% of GDP), which is not only inadequate nominally but will also have a very limited multiplier effect on aggregate output.