Nigerians should expect respite on the cost of living crisis as analysts see the pressure easing in 2024 compared to the previous year.
The analysts are basing their optimism on downward trend of inflation globally, phasing out of the current impact of the petrol subsidy, and expectations of FX inflows amongst others.
According to the National Bureau of Statistics (NBS), the inflation rate in November hit 28.20 percent, the same as 18 years ago, August 2005 and as projected by several analyst inflation shows no sign of slowing.
“This year should be better than 2023, but it won’t be the total transformation of the economy or major reduction like in 2023,” Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said.
If inflation continues to trend downwards globally, then it will be good for the economy because it will reduce the extent to which imported inflation will affect local prices, he said.
“I think the central bank will be able to have a better grip on inflation in 2024 and the exchange rate. And if that happens, it will have a positive impact on domestic economic activities,” he added.
Analysts at Cordros Securities Limited said the local macroeconomic environment will improve relative to 2023.
“Our expectation is hinged on the gradual phasing out of the current impact of petrol subsidy and FX reforms on the non-oil sector, and higher crude oil production relative to 2023 levels amid supportive oil prices,” they said.
“Others are FX supply improvement in line with the authorities’ expectations of FX inflows from arrangements with international banks, and anticipated disinflationary trend in the second half of 2024,” the statement added.
Similarly analyst at Financial Derivatives Company Limited said the country’s business environment will improve as the policy direction becomes clear.
They added that inflation will increase at a slower pace in 2024 due to reduced pace of currency depreciation, monetary policy tightening, CBN moves to reduce deficit financing and ease in global commodity prices.
However, naira has continued to be on a free flow reaching on Tuesday at the Nigeria Autonomous Foreign Exchange Market (NAFEM) as the dollar was quoted at N988.46 compared to N907.11 quoted on Friday.
Though official pronouncements remain elusive, today, whispers of a potential N1,200 per litre price tag for petrol have set independent marketers’ tongues wagging, giving the year an uneasy outlook.
The rising cost of living in Nigeria is a harsh reality biting deep into the pockets and aspirations of everyday citizens.
Chances of food prices falling from its 10-month consecutive high hitting 32.80 percent in November 2023 are low as factors like the removal of subsidies which led to an increase in the prices of food stays.
Accommodation costs also remain out of reach for many, the dream of a secure and comfortable life seems increasingly distant.
SBM Intelligence an African geopolitical risk consulting firm said Nigeria’s inflation rate will remain above 27 percent throughout the year despite the central bank’s monetary policy efforts.
“Consumer spending will continue to be pressured in 2024, decreasing non-essential consumer spending,” said in its recent report.
“The unemployment rate will rise as companies struggle to stay afloat in a challenging economic environment,” it added.
Ayo Teriba, chief executive officer at Economic Associates mentioned that for 2024 cost of living for Nigerians will go in the direction which inflation goes.
“Whatever the inflation outlook is, that’s what the cost of living outlook is. It is the summary of the cost of living changes as it contains food, energy and rent,” he said.