Nigeria’s Inflation Rate Expected to Hit 29.5% by December, Says PwC

Professional services firm PwC Nigeria has projected that the country’s inflation rate will reach approximately 29.5% by the end of the year.

This forecast is significantly higher than the Central Bank of Nigeria’s (CBN) initial projection of 21.4% disclosed in January.

In its latest Nigeria economic outlook, titled “Navigating Economic Reforms,” PwC detailed the factors contributing to this anticipated rise in inflation.

The report highlights the interplay of economic reforms, policy actions, external pressures, and food prices, particularly in the latter half of the year, as key drivers of inflation.

PwC also predicts a marginal growth in Nigeria’s Gross Domestic Product (GDP), estimating a 2.9% increase, supported by sustained policy reforms.

However, the firm cautions that elevated economic pressures could limit growth prospects.

Regarding fiscal sustainability, the report raises concerns about Nigeria’s debt servicing costs. It notes that 89% of the budgeted fiscal deficit is to be financed by new borrowings, which could strain the country’s fiscal health.

According to the Debt Management Office, Nigeria’s total public debt stood at N121.67 trillion as of March 31, 2024, marking a significant increase from N97.34 trillion at the end of December 2023.

This represents a 24.99% rise within three months.

PwC advises the Nigerian government to prioritize macroeconomic stability by addressing security issues, social challenges, and inflationary and exchange rate pressures.

The firm recommends adopting scenario planning before implementing major economic reforms to avoid policy reversals.

For businesses, PwC urges a strategic reevaluation to navigate the challenging economic environment. The report suggests revisiting cost structures and establishing short, mid, and long-term actions to adjust for future conditions.

PwC’s projections and recommendations come as Nigeria continues to grapple with economic uncertainties and seeks to balance reforms with growth and stability.