October 2023 Inflation figures by the National Bureau of Statistics (NBS), Multinational professional services network, KPMG, has said that headline Inflation in Nigeria will reach 30 percent by December 2023.
Nigeria’s current Inflation rate for September is 26.72 percent.
KPMG in its ‘Macroeconomic Review H1 2023 & Outlook for H2 2023,’ released at the weekend, anticipated that the current Inflationary pressure in the Economy will persist into H2 2023, stressing that Headline and Food Inflation is unlikely to ease soon as the depreciation of the Naira continues to reinforce the Inflationary Impact of Fuel Subsidy removal via higher Input Prices and Production Costs caused by Imported Inflation.
The report noted that recent reforms in the Petroleum Industry and the Unification of the Market will be responsible for the Projected spike in Prices of Goods and Services.
The report further stated that the Nigerian economy should grow by 2.6 percent in 2023, lower than both the revised World Bank’s 2023 Forecast of 2.8 percent for Nigeria and the 3.1 percent growth rate achieved in 2022.
The Professional accounting firm noted that in addition to the effect of the Naira redesign Policy, the weak growth for 2023 will be driven by low Crude Oil output, high Inflation, which weakens Consumer demand, weak growth of the Private Sector as several corporate Organizations continue to declare huge Foreign Exchange losses in the first half of 2023 and the FX and Subsidy reforms, which are further expected to weaken Consumer demand and raise the Cost of Doing Business even for the rest of the year.
According to KPMG, Interest rates may not be hiked further. It said President Bola Tinubu’s Administration targets a yearly Economic growth of six percent in the 2023-2026 period, which it seeks to achieve by stimulating the Private Sector by Improving the general ease of doing Business and lowering Interest rates.
The body, however, observed that this puts the Administration in a ticklish Position as Incentivizing the Private Sector by reducing the Interest rate has opposite Implications for Domestic Price stability, apart from raising concerns about Monetary Independence.
This is coming days after Analysts at Afrinvest West Africa are Forecasting a further hike in Nigeria’s headline Inflation rate to 27.9% for October 2023, according to the Company’s October 2023 Inflation Forecast.
After recording a 16-year high CPI of 26.72% in September 2023, the Company predicted a further 102 bps spike for Nigeria in October 2023.
The spike is linked to the Depreciation of the FX rate at both the Official and Unofficial Markets.
Just like other months where food has been the major Contributor to the CPI hike, the trend is Projected to continue in October due to Increased Transportation costs for Agricultural produce.
However, the report suggests that there was a Boost in Food supply in October due to the ongoing Harvest season.
