ICYMI: Inflation to hit 30% by December 2023, KPMG Nigeria predicts

KPMG Nigeria says it anticipates that the current inflationary pressure in Nigeria will persist till the end of 2023.

In September 2023, headline inflation rose to 26.72 percent — up from 25.80 percent in the previous month.

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

In its November report on Friday, titled ‘Macroeconomics Review H1 2023 & Outllook for H2 2023’, the multinational firm projected that the trend will continue till December 2023.

According to KPMG, headline inflation will rise to about 30 percent by December this year.

“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.”

Meanwhile, the professional services firm said it expects the Nigerian economy to grow by 2.6 percent in 2023 — lower than both the revised World Bank’s 2023 forecast of 2.8 percent and the 3.1 percent growth rate achieved in 2022.

In addition to the effect of the naira redesign policy, according to KPMG, 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.

The firm said 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.