Inflation in Nigeria may worsen as the country’s money supply reaches N101.34 million, raising economic conce
In June 2024, Nigeria’s inflation could deteriorate due to the record-breaking increase of its Money supply (M3), indicating the total amount of money within an economy that reached N101.34 million.
Recent data from the Central Bank of Nigeria, CBN reveals this.
According to the data, M3 rose by 56.15% to reach N101.34 million in June of 2024 compared with a recorded figure of N64.90 trillion during the same period in June 2023.
Financial analysts assert that an increase in the money supply may result in escalated inflation.
The money supply experienced a 2.11% month-on-month increase, rising from N99.23 trillion in May 2024.
Despite the monetary tightening of the CBN, there has been an increase in M3.
Since assuming the governorship in September of last year, Olayemi Cardoso has overseen the issuance of Open Market Operation (OMO) bills totaling more than N1.5 trillion by the CBN as a measure to curb inflation and fortify Nigeria’s currency, the Naira.
As of June 2024, the country’s food and core inflation rates were reported at 40.87% and 34.19%, respectively, with interest rates standing at a lofty figure of 26.75%.
Analysts at FBNQuest remarked about the M3 data, stating that though the rise in CIC might indicate an upswing in nominal economic activity and greater consumer expenditure, it also serves as a warning of inflation. This danger becomes more pronounced if money supply growth surpasses real output growth.
The latest development is that the Nigerian government’s ways and means advance threshold has been raised to 10 percent from 5 percent, as recently sanctioned by the National Assembly.
In June 2024, Nigeria experienced a increase in its currency in circulation (CIC) to N4.05 trillion compared to the previous year’s figure of N2.60 trillion.
