Data from the International Monetary Fund (IMF) predicts Nigeria’s inflation rate will stabilize at 14 percent in 2029, signalling a potential end to the current upward trend.
This projection brings some relief amidst worries about the escalating inflation rate, which currently stands at 33.69 percent as of April 2024, according to the National Bureau of Statistics. This figure deviates from the IMF’s earlier prediction of 24.6 percent for the same year.
According to the IMF data, the inflation rate is anticipated to gradually decrease from 23 per cent in 2025 to 16 per cent in 2026, 15.4 per cent in 2027, and finally stabilize at 14 per cent in both 2028 and 2029.
This projected stabilization is a positive development for the Nigerian economy, which has been grappling with rising inflation and interest rates.
Nigeria’s economy has faced challenges in recent times, with increasing inflation and interest rates posing significant threats to economic growth and stability.
The Central Bank of Nigeria has implemented various measures to tackle these challenges, including raising interest rates during the 295th MPC meeting in May 2024.
However, economists have expressed concerns about the ongoing rise in inflation and interest rates, urging the government to address the underlying factors driving inflation, particularly food and transportation costs.
In a recent interview, the chief economist at SPM Professionals, Paul Alaje, expressed his concerns about the increase in the Monetary Policy Rate.
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.
Nevertheless, economist Jonathan Thomas expressed optimism regarding the Nigerian economy, stating that the IMF’s projection of a stabilized inflation rate in 2029 is a positive sign.
However, he emphasized the importance of the government and monetary authorities remaining vigilant and implementing policies that tackle the underlying causes of inflation.
The present surge in inflation and interest rates carries substantial consequences for businesses, households, and the overall economy.
Nigeria can foster sustainable economic growth and development by effectively addressing the factors driving inflation and ensuring a stable economic environment, potentially aligning with the IMF’s forecast.
