Nigeria is bracing for a staggering peak in inflation, with projections indicating a surge to 32.4 percent in March 2024, as forecasted by the Financial Derivative Company (FDC) based in Lagos.
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The spike, hitting a multi-decade high, is attributed to disruptions in the food supply chain and the enduring effects of fuel subsidy reduction, according to FDC.
They also point to what they term as “greedification” and corporate exploitation as contributing factors.
Bismarck Rewane, CEO of FDC, highlighted these concerns during a presentation at the Lagos Business School, noting that while other countries like South Africa, the United Kingdom, and India are experiencing a slowdown in inflation, Nigeria’s prices may rise by 0.7 percentage points compared to February.
The Consumer Price Index, which surged to 31.7 percent in February, is expected to continue its upward trend until later in the year.
Despite aggressive monetary policies by the central bank to curb inflation, FDC doubts their efficacy, suggesting that measures like structural reforms and wage reviews, as seen in countries like Kenya, Turkey, and Egypt, might be necessary.
Meanwhile, Muhammad Sani Abdullahi of the Central Bank of Nigeria projects inflation to soar even higher, to 32.63 percent in March 2024, citing high energy costs, exchange rate fluctuations, and insecurity as key drivers.
In response, the CBN, under the leadership of Olayemi Cardoso, has intensified efforts to stabilize the situation through tighter monetary conditions.
This includes a significant increase in the lending rate and measures to strengthen the Naira.
Despite the challenges, analysts foresee inflation peaking in the second quarter before gradually subsiding.
