Yemisi Izuora
An economist and Chief Executive Officer, of the Center For The Promotion Of Private Enterprise (CPPE) Dr, Muda Yusuf has predicted a slight moderation in Nigeria’s inflation rate.
Providing highlights in his Inflation Outlook for 2025, Yusuf said that inflation may moderate slightly on the expected reduction of the volatility of the exchange rate and possible rebound of the naira.
He also predicted moderation in energy cost as the geopolitical tension eases as result of the impact of Donald Trump’s presidency.
According to him, there is a likely boost in global oil production as USA increases production and the embargo Russia eases.
There is also the factor of the base effect on the inflation numbersas inflation was generally elevated in 2024.
However, he explained that key drivers of inflation may not completely dissipate in 2025.
These include high energy cost including electricity tariff, exchange rate, transportation cost, high Interest rate, high cargo clearing cost, impact of insecurity on agricultural output and food supply, climate change and flooding, imported inflation resulting from geopolitical tensions, supply chain disruptions, trade war and tight global monetary conditions.
Yusuf also said that given the current disposition of the Central a bank of Nigeria (CBN) monetary conditions may remain tight in 2025.
However, the degree of tightening may decelerate in 2025 given the current high levels of MPR and CRR.
The space for further tightening has become limited.
Some of the key factors that would shape the monetary outlook include the following:
• Strong ideological commitment of the CBN to orthodox monetary policy which may continue to result in hike in interest rates.
• Commitment of the CBN to philosophy of inflation targeting.
• Risk of elevated fiscal deficit and its inflationary implications.There is also the related risk of higher money supply growth in 2025.
• Risk of heightened debt levels and consequential implications for increased debt service.