The International Monetary Fund anticipates an imminent halt to the current rise in prices of goods in Nigeria, with projections indicating that the inflation rate will stabilize at 14% by 2029.
This forecast eases concerns about the escalating inflation rate, which stood at 33.69% in April 2024, according to the National Bureau of Statistics. This figure, however, deviates from the IMF’s estimate of 24.6% for the same year.
According to data from the IMF, the inflation rate is expected to decrease over time, from 23% in 2025 to 16% in 2026, 15.4% in 2027, and 12% in 2028 and 2029.
This predicted stabilisation is believed to be a welcome development for the Nigerian economy, which has been grappling with rising inflation and interest rates.
Nigeria’s economy has been struggling recently, with growing risks to stability and growth coming from rising interest rates and inflation.
In order to address these issues, the Central Bank of Nigeria has taken a number of actions, one of which was raising interest rates during the 295th MPC meeting in May 2024.
Economists, however, are concerned about the rate of inflation and interest rate increases that are still occurring. They want the government to deal with the fundamental causes of inflation, which are mainly the costs of food and transportation.
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Paul Alaje, Chief Economist at SPM Professionals, exclusively spoke over the phone with PUNCH online and expressed his disapproval of the Monetary Policy Rate hike.
He said, “I do not encourage any increase in MPR because the increase would have implications.
“Already within 4 weeks, we have seen the Monetary Policy Committee increase on 600 basis points, the MPR.
Alaje asserted that Nigeria is getting poorer and the economy is growing at a slow pace.
“We need to look at other tools rather than monetary tools in providing solutions to our economy. Monetary authorities have tried their best and we have seen so many things they have brought, however, despite all of the efforts, the exchange rate is back at 1,500 heading towards 1,600.
“Our solution would go beyond forcing and using monetary tools when we know that it is not just money supply influencing what we have,” he said.
However, another economist Jonathan Thomas said he believed “the IMF prediction of a stabilised inflation rate in 2029 is a positive indicator for the Nigerian economy. However, the government and monetary authorities must remain vigilant and implement policies that address the root causes of inflation.”
Businesses, households, and the economy as a whole are all significantly impacted by the recent increases in interest rates and inflation.
Through tackling the causes of inflation and preserving a stable economic climate, Nigeria can encourage long-term economic expansion and advancement and potentially achieve the IMF’s forecast.
