The Deputy Governor of the Economic Policy Directorate of the Central Bank of Nigeria (CBN), Muhammad Sani Abdullahi, has projected that Nigeria’s headline inflation will rise to 32.63% in March this year given the prevailing micro and macroeconomic indices of the economy
Abdullahi made this forecast in his paper presented at the CITI-CEEMA Macro Conference held on March 20, 2024, in London.
The banker specifically linked the lingering surging inflationary trend of the economy to primarily to three factors, namely escalated energy costs, the impact of exchange rate fluctuations, and ongoing insecurity concerns.
He projected that headline inflation was expected to rise to 32.63% in March 2024, due to high energy prices associated with the lingering impact of fuel subsidy removal, resulting in an increase in the cost of household utilities, transportation and production costs.
Abdullahi also maintained depreciation of the naira resulting from the market-determined exchange rate policy, is likely to have a pass through effect on domestic prices.
On insecurity, he predicted that the “impact of insecurity on food production, the winding down of the harvest season, and high cost of farm input could impact negatively food prices.”
The apex bank’s management had, based on the ongoing monetary reforms, anticipated a moderation in the inflation rate with a downward trajectory beginning from May 2024.
Some of the recent policy measures introduced by the CBN to tackle the rising inflation trend include the adoption of an Inflation Targeting Framework, deployment of more active communication strategies, and the Monetary Policy Committee’s shifting towards hawkish monetary policy regime.
For instance, the committee raised the Monetary Policy Rate (MPR) by 400 basis points to 22.75%, adjusted the Cash Reserve Ratio (CRR) upward to 45% from the prior 32.5% and revised the asymmetric corridor around the MPR to +100/-700 basis points from +100/-300 basis points at its last meeting.
It would be recalled that the National Bureau of Statistics (NBS) reported on March 15 this year that in February 2024, Nigeria’s headline inflation rate rose to 31.70%, up from 29.90% rate in the preceding month, representing an increase of 1.80% month-on-month.
