Nigeria’s inflation is expected to fall to 21.5% in 2024, from 24.5% in 2023. This is according to the Nigerian Economic Summit Group’s 2024 Macroeconomic Outlook.
According to the report, which was released on January 24, 2024, the reduction in inflationary pressures is expected to stem from less reliance on Ways & Means financing for the budget deficit, a stable structural exchange rate, and extra proactive monetary policies implemented by the Central Bank.
The research also stated that food inflation is expected to be a major contributor to total inflation, driven by rising credit prices, security concerns, and internal displacement challenges. According to the research, “The removal of fuel subsidies will continue to increase core inflation, primarily through high transport and energy costs.”
In the scenario of “obsolescence”, inflation might reach 28.5%. Obsolescence refers to a scenario in which old economic structures, policies, or practices have become outmoded, potentially posing issues or disrupting the economy. Inflation might reach 21.5% in the event of a “comprehensive overhaul”.
Nigeria’s inflation rate in 2023 was 24.5%, up 5.7 percentage points from 18.8% in 2022. Despite the CBN’s hardline position on the monetary policy rate, with the MPR fixed at 18.75% and the Cash Reserve Ratio at 32.5%, inflationary pressures did not ease.
According to the NESG’s 2024 Macroeconomic Outlook, inflationary pressure was mostly caused by productivity constraints rather than monetary issues, posing challenges for the CBN’s monetary actions to manage inflation. As the CBN’s Monetary Policy Committee prepares to meet on February 26 and 27, it is expected that the CBN would maintain its hawkish stance on interest rates.
At the NESG 2024 Macroeconomic Outlook, CBN Governor Yemi Cardoso hinted at this approach, saying, “In this challenging landscape, policy priorities include ensuring long-term inflation reduction, addressing fiscal pressures, and fostering sustainable and inclusive growth. The worldwide management policy climate is projected to remain restrictive until substantial inflation reductions are demonstrated.”
