Despite persistent increases, IMF projects decline in Nigeria’s inflation to 26%

April 16

16:56 2024

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The International Monetary Fund (IMF) expects Nigeria’s inflationary pressure to ease to 26 percent this year.

The fund spoke on Nigeria’s economic growth trajectory while presenting global projections from its World Economic Outlook at a news conference in Washington DC on Tuesday.

Inflation has remained a major challenge for Nigerians and continues to worsen the operations of businesses in the country.

To tame the inflationary uptick, the Central Bank of Nigeria (CBN) had raised the interest rate by 400 basis points (bps) — the largest in recent years — to 22.75 percent on February 27.

The regulator further jacked up the monetary policy rate (MPR) by an additional 200 basis to 24.75 percent.

Still, inflation has continued to soar in Nigeria, extending increases seen between 2022 and 2023 to 33.20 percent in March — up from 31.70 percent in February.

However, speaking during the press conference, Daniel Leigh, division chief of the research department at IMF, said inflation would drop in Nigeria alongside global inflationary pressures estimated to decline from 2.8 percent at the end of 2024 to 2.4 percent at the end of 2025.

“Growth in Nigeria steady, but actually rising this year from 2.9 percent last year to 3.3 percent this year,” Leigh said.

“We’ve seen expansion from the recovery in the oil sector with a better security situation, and also improved agriculture, benefiting from the better weather conditions and the introduction of dry season farming.

“So, there’s a broad-based increase also in the financial sector in the IT sector. Inflation Yes, it has increased. Part of this reflects the reforms in the exchange rate. So this explains also why we revised our inflation projection for this year at 26%.

“But with the tight monetary policies and the significant interest rate increases during February and March, we see inflation declining to 23% next year and then 18% in 2026. So in the right direction.”

The lender also asked central banks across the world to ensure that inflation is durably heading back to target.