Latest forecasts from the IMF suggest that Nigeria’s Inflation rate will stabilize at 14 percent by 2029, hinting at a possible conclusion to the ongoing upward trajectory. The recent projection provides a glimmer of hope in light of concerns over the rising inflation rate. As of April 2024, the rate has reached 33.69 percent, a significant increase from the IMF’s initial forecast of 24.6 percent for the year. This data comes from the National Bureau of Statistics.
The International Monetary Fund (IMF) predicts a steady reduction in the inflation rate, starting at 23 percent in 2025 and decreasing to 16 percent in 2026, followed by 15.4 percent in 2027. The rate is expected to stabilize at 14 percent in both 2028 and 2029. The Nigerian Economy has been struggling with increasing inflation and interest rates, so the expected stabilization is seen as a good sign for its future.
Economists are worried about the continuous increase in inflation rates.
Over the past few years, Nigeria has encountered difficulties in its economy, as rising inflation and interest rates have emerged as major obstacles to achieving Economic Growth and stability. In May 2024, The Central Bank of Nigeria (CBN) took steps to address challenges by increasing interest rates at its 295th MPC meeting. Various measures have been put in place to combat these issues. Economists are worried about the continuous increase in inflation and interest rates.
They are recommending that the government take action to tackle the root causes of inflation, especially the rising costs of food and transportation. During a recent discussion, Paul Alaje, the chief economist at SPM Professionals, shared his apprehensions regarding the rise in the Monetary Policy Rate. His stance was clear: he did not support a rise in MPR due to the potential repercussions it could bring. In just one month, the Monetary Policy Committee has already raised the MPR by 600 basis points.
Alternative strategies must be considered to address economic challenges.
Alaje declared that the economic growth in Nigeria is sluggish, resulting in a decline in wealth for the country. A different approach is necessary for finding solutions to the economy beyond just relying on monetary tools. Despite the efforts of monetary authorities and the various measures they have implemented, the exchange rate continues to rise, now approaching 1,600 after being at 1,500. The country must consider alternative tools and strategies for addressing economic challenges effectively.
When it comes to addressing the issue at hand, the approach of the country extends beyond mere coercion and financial strategies, as citizens are aware that the factors at play are not limited to monetary supply, he explained. Despite previous concerns, economist Jonathan Thomas remains hopeful about the future of the Nigerian economy. He believes that the prediction of the IMF of a steady inflation rate in 2029 shows promise for the country’s economic stability.
Related Article: Inflation Rate may Rise as High as 44% — IMF
Nevertheless, he stressed the significance of the need for the government and financial regulators to stay alert and enforce strategies aimed at addressing the root factors contributing to inflation. Businesses, households, and the economy as a whole are facing significant implications due to the current rise in inflation and interest rates. By effectively managing the factors that contribute to inflation and maintaining a stable economic environment, Nigeria has the opportunity to achieve sustainable economic growth and development, possibly in line with the projections of the IMF.