Businesses expect inflation to ease in next 3 months – CBN report

Business owners and households expect the level of inflation to taper, over the next three months, the Central Bank of Nigeria (CBN) Inflation Expectation report shows.

According to the report, 50 percent of business respondents expect inflation to decline next month, while 52.9 percent of respondents expect the inflation rate to go lower over the next three months. In six months, only 46.5 percent of respondents expect inflation to reduce.

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Meanwhile, household respondents believe inflation will reduce gradually over the next 6 months. In the next month, 70.8 percent of household respondents expect inflation to go down, while 66 percent of households think inflation will decline in three months. In 6 months, only 62.5 percent of respondents expect inflation to decline.

Nigeria’s headline inflation rate rose to 33.88 percent in October 2024, up from 32.70 percent in September, according to the National Bureau of Statistics (NBS). This was driven by pressures from elevated food prices and transportation costs.

The Economic Intelligence Unit (EIU) recently remarked that Nigeria’s business environment will remain challenging in the next 5 years, noting that the recent economic reforms carry the potential for long-term improvements.

“In the early part of the forecast period Nigeria will grapple with high inflation, a collapse in US dollar market size and an overstretched fiscal position and sluggish output,” the EIU said.

Companies and households who partook in the survey also urged the CBN to relax its hawkish monetary stance by reducing its hiked interest rates.

The data showed that 68.5 percent of respondents want the CBN to reduce its Monetary Policy Rates, with 98.9 percent of respondents following up with the CBN’s communications.

The Cardoso-led Monetary Policy Committee (MPC) has raised the Monetary Policy Rate (MPR) by 875 basis points to 27.5 percent in 2024 to battle inflationary pressures and stabilise the economy.

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Business owners continue to bear the brunt of elevated inflation rates and hiked interest rates, significantly increasing the costs of doing business.

According to the CBN report, more companies expect to have increased expenses over the next three months. Sixty percent of firms who responded expect their expenditure to increase over the next 6 months while only 45 percent of households expect increased expenditure.