Inflation May Peak At 15.62% In Q2, 2021 — CBN Report

The inflation rate in Nigeria is expected to further rise from the current 14.23 per cent to 15.62 per cent in the next six months, a monthly Central Bank of Nigeria (CBN) survey of business expectations shows.

The November 2020 Business Expectations Survey further showed that the inflationary trend would drop to 14.03 per cent by the end of 2021.

The survey was conducted by the CBN from November 9-13, 2020 with a sample size of 1,050 businesses nationwide. A response rate of 89.5 per cent was achieved and the sample covered the agric/services, manufacturing, wholesale/retail trade, and construction sectors.

The respondent firms were made up of small, medium, and large corporations covering both import-oriented and export-oriented businesses.

Further findings of the survey indicated that “the respondent firms expect the naira to further depreciate in the current month but appreciate in the next month, next two months and next six months, as their confidence indices stood at -3.4, 12.3, 21.8 and 35.2 index points, respectively.”

Aggregately, respondent firms expressed pessimism on the macro-economy. It said at “-1.5 index points, the overall confidence index (CI) on the macroeconomy was pessimistic in November 2020. However, respondents are optimistic in their outlook for the month of December with a confidence index of 38.8.”

“They also expressed optimism in the overall business outlook for January and May 2021 as shown in greater confidence of the economy at 47.1 and 59.3 index points, respectively. The pessimism on the macro-economy in the current month was driven by the opinion of respondents from agric/services (-1.2 points), construction (-0.6 points) and wholesale/retail trade sectors (-0.3 points).

“The major drivers of optimism for next month were agric/services (23.1 points) and manufacturing sectors (11.3 points),” the report indicated.