Nigeria’s inflation rate will drop to 23% next year -IMF

Onwubuke Melvin
Onwubuke Melvin

The Global Economic Outlook has projected a decline in Nigeria’s inflation to 23 per cent next year.

This disclosure was made during the International Monetary Fund/World Bank Spring Meetings in Washington D.C., on Tuesday, according to The Punch.

The IMF provided projections for Nigeria’s economy, indicating a significant shift in inflation rates.

Head of the IMF Research Department, Daniel Leigh, underlined the impact of Nigeria’s economic reforms, including the exchange rate adjustment that led to a sharp rise in inflation to 33.2 per cent in March.

National Bureau of Statistics in its data said Nigeria’s inflation rate rose to 33.2 per cent in March.

It was revealed also that the food inflation rate increased to over 40 per cent in the first quarter of 2024.

Leigh said, “We see inflation declining to 23 per cent next year and then 18 percent in 2026.”

However, this is contrary to the fund’s prediction of a new single-digit (15.5 per cent ) inflation rate for 2025 which it predicted last year

In addition, he explained that this expansion is attributed to the recovery of the oil sector, improved security and progress in agriculture as a result of favourable weather conditions, and the introduction of drought season farming, with Nigeria’s economy, expected to grow by 3.3 percent from 2.9 percent last year.

He added “Inflation has increased, reflecting the reforms, the exchange rate, and its pass-through into other goods from imports to other goods,”

The IMF official also noted a broad-based increase in Nigeria’s financial and IT sectors.

He added that the IMF has revised its inflation forecast for this year to 26 per cent, but emphasised that tight monetary policy and significant increases in interest rates during February and March are expected to mitigate inflation.

In his remark, an official of the IMF Research Department, Pierre Olivier Gourinchas, pointed out that oil prices have been rising partly due to geopolitical tensions in several countries, and services inflation is still at its highest level.

Gourinchas stressed that the priority should be to bring inflation back towards target, despite Nigeria’s failure for more than a decade to achieve its six to nine per cent inflation target.

He warned of the risk that geo-economics fragmentation could jeopardise world growth prospects, as well as a need for close monitoring of monetary policy.

“Trade linkages are changing, and while some economies could benefit from the reconfiguration of global supply chains, the overall impact may be a loss of efficiency, reducing global economic resilience,” He explained.

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