In June 2024, Nigeria witnessed a surge in its Money supply (M3) to an all-time high of N101.34 million, raising concerns about potential inflation exacerbation.
Data released by the Central Bank of Nigeria (CBN) revealed this significant growth.
The figures illustrated a 56.15 percent increase in M3, soaring from N64.90 trillion in June 2023 to N101.34 million in June 2024.
Financial experts emphasize that a surge in money supply often triggers inflationary pressures.
From May to June 2024, the month-on-month statistics indicated a 2.11 percent rise in money supply from N99.23 trillion to N101.34 million.
This uptick in M3 occurred despite the CBN’s efforts to tighten monetary policies.
Since Olayemi Cardoso assumed office as governor in September last year, the CBN has issued over N1.5 trillion in Open Market Operation (OMO) bills, aiming to curb inflation and fortify the Naira.
As of June 2024, the core inflation rate in the country was 34.19 percent, food inflation stood at 40.87 percent, and interest rates were pegged at 26.75 percent.
Commenting on the M3 data, analysts at FBNQuest remarked, “While the increase in CIC could indicate improved economic activity and escalated consumer spending in nominal terms, it also raises concerns about inflation risks, especially if money supply growth outpaces real output growth.”
Recently, the National Assembly increased the Nigerian government’s ways and means advance threshold from 5 percent to 10 percent.
Furthermore, as of June 2024, Nigeria’s currency in circulation (CIC) surged from N2.60 trillion to N4.05 trillion compared to the same period last year.