LAGOS, Nigeria (VOICE OF NAIJA)-Analysts foresee Nigeria’s inflation rate surpassing 32% in March, according to a report by Lagos-based Financial Derivative Company (FDC) indicating a peak of 32.4%.
This anticipated surge, reaching a multi-decade high, underscores ongoing economic challenges in the country.
“Inflation in March is expected to surge to 32 per cent underpinned by food supply chain disruption and lingering impact of fuel subsidy reduction,” FDC said.
It further emphasised that consumer prices are exacerbated by what it labelled as “greedification,” “corporate greed and the naked exploitation of consumers by conscienceless marketers.”
During a presentation at the Lagos Business School (LBS), CEO of FDC, Bismarck Rewane highlighted that while inflation is slowing in countries like South Africa, the United Kingdom, and India, Nigeria’s prices are expected to rise by 0.7 percentage points compared to February.
The Consumer Price Index, which surged to 31.7 percent in February, as reported by the National Bureau of Statistics, is expected to maintain its upward trend until a decline is observed later in the year.
“Inflation is set to peak in May/June and begin to decline after the wage review,” FDC noted.
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The Lagos-based company observed that despite the central bank’s aggressive monetary policy aimed at curbing high inflation, it may not be adequate to lower the numbers significantly.
They highlighted that countries like Kenya, Turkey, and Egypt took additional measures beyond monetary tools, such as obtaining new funds through Eurobonds and bailout interventions from the World Bank or International Monetary Fund.
FDC also emphasised that structural reforms and wage reviews were strategies implemented by these countries to manage their inflation rates.
Meanwhile, the deputy governor of the Economic Policy Directorate of the Central Bank of Nigeria (CBN), Muhammad Sani Abdullahi, predicts that the nation’s Consumer Price Index (CPI) will rise to 32.63 percent.
Abdullahi identifies three primary factors driving the persistent inflation: high energy expenses, fluctuations in exchange rates, and ongoing security issues within the nation.
He said: “Headline inflation is expected to rise to 32.63 per cent in March 2024, due to: high Energy Prices: Lingering impact of fuel subsidy removal, resulting in an increase in the cost of household utilities, transportation and production costs.
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“Exchange Rate Passthrough: Depreciation of the naira resulting from the market-determined exchange rate policy, is likely to have a passthrough effect on domestic prices.
“Insecurity: Impact of insecurity on food production, the winding down of the harvest season, and high cost of farm input could negatively impact food prices.”
Meanwhile, under the leadership of Olayemi Cardoso, the Central Bank of Nigeria (CBN) has intensified efforts to curb inflation through stricter monetary policies.
Notably, the CBN raised the country’s lending rate by a cumulative 600 basis points to 24.75 percent between its monetary policy committee meetings in February and March.
Cardoso’s stewardship has also stabilised the nation’s currency, the Naira, which is now hovering around N1,200 per US dollar. This marks a rebound for the currency, which was previously heading towards N2,000/$ in less than two months.
“Our analysis indicates that inflation is likely to reach a peak in the Q2 before gradually receding, all things being equal,” analysts at Coronation, a leading Africa financial services company, said.