Stears, the data-driven insights provider, has issued a warning that Nigeria’s inflation rate could reach 30 percent by December 2023.
The company unveiled its Pan-African inflation forecasts, predicting a steady increase in Nigeria’s annual inflation rate, culminating at approximately 30 percent, a level not seen since the country’s modern democratic era.
Stears stated that its forecasts rely on trusted econometric tools that take into account a wide range of factors influencing inflation, encompassing both general and country-specific dynamics.
According to Fadekemi Abiru, Stears’ Head of Insights, the widening exchange rate premium, the difference between official and parallel rates, rose to 25.2 percent in September, signifying a significant increase compared to August.
The firm expects this gap to continue widening, exerting additional inflationary pressures unless there are substantial dollar inflows into the economy. Additionally, a prolonged and heavy rainy season has affected harvests, further contributing to inflation.
Stears has prioritized Nigeria’s forecasts following the release of the country’s September 2023 inflation data.
Kenya’s projections are scheduled for early November, with forecasts for other African nations set for early 2024.
Stears emphasized that its forecasts aim to guide corporations, professionals, and policymakers in their short-to-medium term pricing, investment, and policy decisions.
The provided inflation forecasts span from October 2023 to December 2024 and include both average and year-end predictions for 2023 and 2024.
Nigeria currently grapples with one of the world’s highest inflation rates, pushing an estimated four million people into poverty due to the escalating cost of living between January and May 2023.
The World Bank has noted that the removal of fuel subsidies, devaluation, and exchange rate unification will continue to intensify inflationary pressure in the country, eroding the purchasing power of the average Nigerian.
The World Bank projected a 25 percent inflation rate for 2023, but Nigeria’s current inflation rate exceeds that estimate.
According to the International Monetary Fund’s recent World Economic Outlook report, high inflation is anticipated to slow Nigeria’s economic growth to 2.9 percent in 2023.