Tony Chukwunyem Financial Derivatives Company (FDC) Limited has forecast that inflation is likely to rise further to 22.5 per cent in May from 22.22 per cent in April. If the prediction proves correct, it will mean that Nigeria’s inflation rate has increased for the fifth consecutive month since December 2022. Nigeria has experienced steadily rising inflation over the last seventeenth months, falling slightly in December.
The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) raised the benchmark interest rate-Monetary Policy Rate(MPR)- for the seventh consecutive time to 18.5 per cent from 18 per cent previously at its meeting last week in its bid to curb inflation which increased by 18bps to 22.22 per cent in April 2023 from 22.04 per cent in March 2023. However, analysts at CSL Stockbrokers argued that contrary to the MPC’s view, the continuous rate hikes would not effectively curb inflation and would further negatively affect economic growth.
In a report, the analysts said: “In our view, we reiterate that the continuous rate hike will further hamper growth. We expect the hike in MPR rate to continue to have little effect on inflation numbers, as issues relating to the supply factors that continue to pressure inflation numbers remain largely unattended to.” They further stated: “The aggressive rate hikes will likely hamper the country’s growth negatively in the long run while having a minimal effect in combating inflation and attracting foreign inflows.”
