Why Nigeria’s Inflation Rate May hit 30% by December

Indications are rife that Nigeria’s annual inflation rate may climb to around 30 per cent, highest in the country’s modern democratic era, Stears Pan-African Inflation Forecasts has predicted.

Stears, a leading economic analysis and data-driven insights provider, announced its market-leading Pan-African inflation forecasts, projecting Nigeria’s annual inflation rate to climb steadily until year-end, culminating at around 30 per cent, a level previously untouched in the country’s modern democratic era.

The forecasts lean on trusted econometric tools that consider a myriad of factors driving inflation, from general to country-specific dynamics. By adopting a meticulous approach to forecasting, Stears seeks to serve two fundamental goals: ensuring the utmost precision in their inflation estimates and enabling users to simulate inflation scenarios based on unfolding real-world events.

The latest release aims to guide corporates, professionals, and policymakers in their short-to-medium term pricing, investment, and policy decisions. The inflation forecasts, spanning from October 2023 to December 2024, include both average and year-end predictions for 2023 and 2024.

Stears’ Head of Insights, Fadekemi Abiru, expanded on Stears’ view on the drivers of Nigeria’s inflation rate, saying, “In September, we saw the exchange rate premium—the differential between official and parallel rates—rise to 25.2%, which is a significant increase from what it was in August.

“We expect this gap to keep widening and exerting further inflationary pressures unless we see significant dollar inflows into the economy. We have also had heavy and prolonged rainy season, which has affected harvests.”

“Following the recent release of Nigeria’s September 2023 inflation data, the country’s forecasts have been prioritised, with Kenya’s projections scheduled for early November and forecasts for other African nations coming in early 2024,” she added.

In today’s complex economic landscape, reliable data is the linchpin for effective decision-making. With these forecasts, Stears aims to offer clarity, precision, and actionable insights into the intricate dynamics of inflation in Africa, particularly for those shaping economic policies and investment strategies.

The data and intelligence company also recently launched its Africa FX Monitor, an intelligence tool that offers a comprehensive exchange rate data repository and insights designed to cater to the needs of businesses and investors in African markets. These intelligence solutions will empower businesses with foresight to invest with confidence and operate with precision.