KPMG Nigeria's latest economic forecast signals a concerning trend as it predicts the persisting inflationary pressure in the country, with expectations that the headline inflation will soar to approximately 30% by December 2023. This projection follows the ninth consecutive rise in Nigeria's inflation rate, reaching 26.72% in September 2023, up from 25.80% the previous month.
KPMG attributes this upward trajectory to the depreciation of the naira, exacerbating the impact of fuel subsidy removal on input prices and production costs. The multinational firm emphasizes that the combined influences of fuel subsidy removal and foreign exchange liberalization are likely to drive the headline inflation to the projected 30% by year-end. Additionally, KPMG anticipates a modest economic growth of 2.6% in 2023, citing factors such as low crude oil output, high inflation affecting consumer demand, and weakened private sector growth.
The ongoing naira redesign policy and foreign exchange and subsidy reforms are expected to further impede consumer demand and escalate business costs for the remainder of the year. This economic outlook reflects a challenging landscape with implications for various sectors, prompting concerns about the nation's economic resilience.
