Economists and analysts are anticipating a continued upward trajectory in Nigeria’s inflation rate as the National Bureau of Statistics prepares to release its report for June 2024.
Following a record high of 33.95% in May, economists expect inflation to maintain its ascent, albeit at a slightly moderated pace compared to previous months.
Inflation in Nigeria has been driven by persistent challenges in the agricultural sector, exacerbated by factors such as insecurity in food-producing regions, elevated transportation costs, and ongoing depreciation of the national currency, the naira.
Experts from Meristem have projected that headline inflation could reach 34.01%, with food inflation likely to rise to 40.74% driven by increased demand during the Eid-el-Kabir celebrations and continued supply chain disruptions. Core inflation, which excludes volatile food and energy prices, is expected to climb to 27.30%.
Analysts at Cowry Assets Management Limited offered a slightly higher projection, estimating headline inflation to potentially reach 34.25%. They attributed this increase to supply chain disruptions, currency depreciation, and the adverse effects of climate change on agriculture, which have collectively driven up prices of essential food items across the country.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria is anticipated to respond to these inflationary pressures with further increases in the Monetary Policy Rate (MPR). Since the beginning of the year, the MPC has already raised the MPR by 650 basis points, bringing it to 26.25% as of May 2024. The committee, chaired by CBN Governor Dr. Olayemi Cardoso, has consistently emphasized its commitment to containing inflation through decisive policy measures.
Dr. Cardoso reiterated this stance at a recent BusinessDay CEO Forum, underscoring the MPC’s dedication to data-driven decisions aimed at stabilizing the naira and curbing inflationary pressures. He emphasized that while the committee acknowledges the need for economic growth, its primary focus remains on controlling inflation to safeguard the purchasing power of Nigerians.
As economic observers await the upcoming NBS report, all eyes are on whether the projected inflationary trends will indeed materialize and how the MPC will respond in its upcoming meeting later this month.
