The financial world is waiting impatiently for the National Bureau of Statistics (NBS) to release Nigeria’s consumer price index (CPI) data for March 2024.
The country’s inflation rate for the month will be revealed in this report, and preliminary data suggests that the upward trend seen in recent months may continue.
The backdrop of Previous Trends
Nigeria’s inflation rate jumped to a startling 31.7% in February 2024, the highest level in almost 28 years. This gain was a notable rise from the 31.8% inflation rate in April 1996 and came after a rise from 29.9% in January 2024. If the numbers for March are in line with these projections, this worrying trend might continue.
Expert Predictions and Analysis
The headline inflation rate is expected to rise again in March, but more slowly than in prior increases, according to economists and observers. In February, monthly inflation increased by 3.12%, which was the highest rate of growth in half a year.
CBN’s Policy Response
The Nigerian Central Bank (CBN) has responded to these inflationary pressures with initiative. The CBN has put in place a number of measures to increase the value of the naira, one of which is the restoration of dollar sales to Bureau De Change (BDC) operators. In addition, between February and March, the Monetary Policy Rate (MPR) increased by a significant 600 basis points, from 18.75% to 24.75%. By taking this action, the financial system’s liquidity will be tightened and the difference between interest rates and inflation will close.
Dynamics of Money Supply
The broad money supply (M3) increased from N93.72 trillion to a record high of N95.56 trillion in February 2024, in spite of the CBN’s hawkish attitude. Notably, the amount of money in circulation decreased slightly from N3.65 trillion in January to N3.69 trillion.
Planning for the future
Market analysts are predicting that the inflation rate may fall off in the second half of the year as we wait for the release of the March CPI report. The expected base impact and predicted stability in the foreign currency (FX) market are the main causes of this confidence.
Conclusion
The upcoming CPI report will offer insightful information about the state of Nigeria’s economy and the effectiveness of recent policy initiatives. Although inflationary pressures are still a worry, the proactive actions taken by the CBN provide hope for medium-term stabilization. Investors ought to closely monitor these advancements and modify their portfolios correspondingly to effectively manage the dynamic economic terrain.
