Nigeria’s inflation to hit 30% in Q4 – KPMG
By Ralph Tathagata
Against the backdrop of Nigeria’s current headline inflation rate of 26.72% for the month of September, the nation’s inflation is projected to hit 30% by December 2023.
KPMG, the global financial advisory service firm, stated in a report that recent reforms in the petroleum industry such as the fuel subsidy removal and unification of the foreign exchange market will be responsible for the projected hike in prices of goods and services.
Noting this in its macroeconomic review for the first half of 2023 and its outlook for the second half of the year, KPMG said, “We anticipate that the current inflationary pressure in the economy will persist into H2 2023. Specifically, our model suggests that the combined influence of fuel subsidy removal and foreign exchange liberalisation may drive headline inflation to about 30% by December 2023.”
The report specifically stated that the current MPR hike being adopted by the Central Bank of Nigeria (CBN) in the last 18 months has proven ineffective in stalling the increasing inflationary trend. It, however, advised that addressing issues such as energy and transportation costs, supply chain problems, and boosting local production will be more effective than increasing interest rates.
What’s more? The global financial advisory service firm projected that Nigeria’s economy will grow by 2.6% in 2023, which is a significant reduction from the World Bank’s projection of 2.8% in 2023. It also added that the recent reforms from President Bola Ahmed Tinubu such as fuel subsidy removal and unification of the FX market will lower GDP growth in the country.
“We expect the Nigerian economy to grow by 2.6% in 2023, lower than the revised World Bank’s 2023 forecast of 2.8% for Nigeria and the 3.1% growth rate achieved in 2022,” KPMG said.
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