CBN Deputy Gov. forecasts 32.63% inflation rate for Nigeria in March 2024

By Sodiq Adelakun

Deputy Governor of Nigeria’s Central Bank, Muhammad Sani Abdullahi, revealed alarming projections on Nigeria’s inflation trajectory during an address at London’s CITI-CEEMA Macro Conference on March 20, 2024.

Abdullahi’s analysis shed light on three critical factors driving this surge: escalating energy costs, the ripple effects of exchange rate fluctuations, and the persistent shadow of insecurity looming over the nation.

“Headline inflation is expected to soar to 32.63 percent in March 2024, attributed to surging energy prices, exchange rate fluctuations, and insecurity disrupting food production and prices,” stated Abdullahi.

Despite the bleak outlook, the Central Bank maintains an optimistic stance, envisioning a shift in the inflation trajectory starting May 2024. This optimism is grounded in a series of strategic initiatives devised to tackle the inflationary pressures head-on..”

The Central Bank, however, holds an optimistic outlook, foreseeing a turnaround in the inflation trajectory commencing May 2024. This optimism is underpinned by a series of strategic initiatives aimed at addressing the inflationary pressures.

These measures encompass the adoption of an Inflation Targeting Framework, intensified communication strategies, and a shift towards a tighter monetary policy stance.

Central to these efforts is the significant adjustment in the Monetary Policy Rate (MPR), witnessing an increase of 400 basis points to 22.75 percent. Additionally, the Cash Reserve Ratio (CRR) has been recalibrated to 45 percent from its previous 32.5 percent, accompanied by adjustments in the asymmetric corridor surrounding the MPR. These adjustments signal a resolute stance in managing inflation expectations.

Despite these measures, Nigeria’s inflation rate surged to 31.70 percent in February 2024, marking a notable increase from 29.90 percent recorded in January of the same year. This spike defied the hike in the MPR to an unprecedented 22.75 percent, indicating the complexity of the economic challenges at hand.

Member of Nigeria’s Monetary Policy Committee (MPC), Murtala Sabo Sagagi, underscored the structural impediments within Nigeria’s economy, asserting that traditional monetary policy tools face significant limitations in curbing Nigeria’s inflation without addressing underlying issues such as insecurity and food shortages. Sagagi emphasized the necessity of a comprehensive roadmap for economic and social rejuvenation to effectively combat inflationary pressures.

As Nigeria grapples with these multifaceted challenges, the efficacy of the Central Bank’s measures remain under scrutiny, with stakeholders closely monitoring the unfolding economic landscape amidst hopes for stability and resilience in the face of adversity.