The Financial Derivatives Company Limited, an economic outfit led by Bismarck Rewane, has said that Nigeria’s inflationary figure is approaching 30 per cent.
According to the firm, the National Bureau of Statistics (NBS) is poised to release the January 2024 inflation report, with projections indicating a likely spike in headline inflation to 29.73%, surpassing December’s 28.92%. This would mark the thirteenth consecutive monthly increase, with all sub-indices, including food and core inflation, expected to rise accordingly. The primary reason for this surge is the significant depreciation of the naira, which reached an all-time low of N1,530/$ in January due to persistent forex market imbalances. Other contributing factors include rapid money supply growth (51%) and heightened insecurity in the food-producing states. This prolonged inflationary trend is adversely affecting consumers’ purchasing power and escalating operational costs for businesses, exacerbating poverty levels, which have risen from 79 million in 2018 to 104 million in 2023, according to the World Bank.
CBN to maintain its hawkish monetary stance
The MPC is scheduled to hold its first meeting in 2024 on February 26, six months after its last meeting. The CBN has recently reiterated its commitment to ensuring price stability (exchange rate and inflation). With the unrelenting rise in inflation and persistent naira depreciation, the committee is likely to tilt more towards a more restrictive monetary policy stance. Most analysts expect the committee to hike the monetary policy rate by at least 200bps to 20.75%pa. In a positive move, the 364-day treasury bill rate climbed by 7.46% to 19% p.a. at the last auction (February 7).
