The National Bureau of Statistics (NBS) is set to release the consumer price index report, which reveals the level of inflation in the country for the month of March 2024 and experts interviewed by TheWitness have predicted higher rates compared to the previous month.
Recall that Nigeria’s inflation rate rose to an almost 28-year high of 31.7% in February 2024, representing 180 basis points increase from the 29.9% recorded in January 2024 and the highest level since April 1996, when inflation dropped to 31.8%. This means that an increase in March’s inflation rate would effectively translate to a 28-year high.
Economic analysts and commentators alike have predicted that Nigeria’s headline inflation rate is highly likely to increase beyond the previous month’s level albeit at a slower pace. Monthly inflation had surged by 3.12% in February, which the fastest pace of monthly inflation in six months.
However, since the release of the last report, the Central Bank of Nigeria (CBN) has been busy with different policies aimed at strengthening the value of the naira. This includes the resumption of dollar sales to Bureau De Change (BDC) operators amongst other policies targeted at banks’ FX positions.
The apex bank also increased the Monetary Policy Rate (MPR) by a cumulative 600bps from 18.75% to 24.75% between February and March, in a bid to improve the gap between inflation and interest rate as well as to tighten liquidity in the system.
Recall that broad money supply (M3) rose to a record high of N95.56 trillion in February 2024 from N93.72 trillion recorded in the previous month. This is despite the hawkish stance of the CBN. Although currency in circulation recorded a marginal decline to N3.69 trillion from N3.65 trillion recorded in January.
As anticipation builds for the release of the eagerly awaited CPI report by the NBS, analysts are foreseeing a tapering of the rate by the second half of the year. This expectation is rooted in the influence of the base effect coming into play, alongside the anticipated stability in the FX market.
