Inflation Rate Predicted to Rise to 32.63% in March 2024 – CBN Official

Inflation Rate Predicted to Rise to 32.63% in March 2024 – CBN Official

The Deputy Governor of the Central Bank Nigeria (CBN), Muhammad Sani Abdullahi, has predicted that Nigeria’s inflation rate is expected to surge to 32.63% in March 2024. Mr. Abdullahi delivered this prediction at the CITI-CEEMA Macro Conference in London on March 20, citing key economic indicators and projections.

A copy of his presentation obtained by Economic confidential shows that the inflation spike is driven by three major factors: escalated energy costs, the impact of exchange rate fluctuations, and ongoing insecurity concerns.

Headline inflation is expected to rise to 32.63% in March 2024, due to:

“High Energy Prices: Lingering impact of fuel subsidy removal, resulting in an increase in the cost of household utilities, transportation and production costs.

“Exchange Rate Passthrough: Depreciation of the naira resulting from the market-determined exchange rate policy, is likely to have a passthrough effect on domestic prices.

“Insecurity: Impact of insecurity on food production, the winding down of the harvest season, and high cost of farm input could impact negatively food prices.”

The CBN, however, anticipates a turnaround, with inflation expected to start its downward trajectory beginning in May 2024.

This optimism is based on a series of strategic measures to tackle rising inflation. Among these are the adoption of an Inflation Targeting Framework, deploying more active communication strategies, and shifting towards a tighter monetary policy stance.

Notably, the Monetary Policy Rate (MPR) has seen an increase of 400 basis points, reaching 22.75%, and the Cash Reserve Ratio (CRR) has been adjusted to 45% from the prior 32.5%. Furthermore, adjustments have been made to the asymmetric corridor around the MPR to +100/-700 basis points from +100/-300 basis points, signalling a robust stance on managing inflation expectations.