Inflation To Hit 30% By December 2023 – KPMG

A global financial advisory service company, KPMG has projected that headline inflation in Nigeria will reach 30 per cent by December 2023.

The figure marked the ninth consecutive rise in the country’s inflation rate this year.

In its November report titled ‘Macroeconomics Review H1 2023 & Outlook for H2 2023’ which was released last Friday, KPMG projected that the trend would continue till December 2023.

The report reads: “Headline and food inflation are unlikely to ease soon as the depreciation of the naira continues to reinforce the inflationary impact of fuel subsidy removal via higher input prices and production costs caused by imported inflation,” the report said.

“Specifically, our model suggests that the combined influence of fuel subsidy removal and foreign exchange liberalisation may drive headline inflation to about 30% by December 2023.”

KPMG said it expected the Nigerian economy to grow by 2.6 per cent in 2023 — lower than both the revised World Bank’s 2023 forecast of 2.8 per cent and the 3.1 per cent growth rate achieved in 2022.

The firm said in addition to the effect of the naira redesign policy, the weak growth for 2023 will be driven by low crude oil output, high inflation, which weakens consumer demand, and weak growth of the private sector as several corporate organisations continue to declare huge foreign exchange losses in the first half of 2023.

KPMG stated that other factors are foreign exchange and subsidy reforms, which are further expected to weaken consumer demand and raise the cost of doing business even for the rest of the year.