FG’s inflation target of 15% achievable on FX stability – Oyedele

Nigeria’s ambitious target to rein inflation to 15 percent in 2025 is not out of thought provided that the exchange rate continues to stabilise, according to Taiwo Oyedele,

Oyedele, who featured in a panel session at the PwC economic outlook and 2025 budget review in partnership with BusinessDay, said with base effect inflation is expected to decline to 25 percent, stating that FX had the biggest effect on prices last year.

This comes against the backdrop of varying views that the target may not be feasible even after the consumer price index (CPI) rebasing later this month.

“You say every time that 15% is not possible. And I do understand why they’re saying it’s not possible. If you look at the average inflation for 2024, it’s 33%. If things remain as bad as they were in 2024, in 2025, nominally, inflation will be 25%,” Oyedele said.

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“But if you look at what were the factors that pushed inflation in 2024, FX passed through the biggest factor by a mile,” the tax expert added.

President Bola Tinubu is aiming to halve prices that have soared to an over three decades high this year. But many analysts have differed on this, claiming that Nigeria’s inflationary pressures were exacerbated by high food prices.

Oyedele noted that the recent calmness in the market and the stability of the naira will rob off on inflation trending downward this year together with base effects.

MPR piling pressure on prices

Nigeria’s tax chief also argued that the monetary policy rate (MPR) “as far as I’m concerned, was a factor that was pushing inflation up, not bringing it down.”

“I think that you only stop inflation from the fiscal side if you inject new money. If the money that the government is spending is from taxes, is from resource revenue, and is from borrowing, not from the central bank, then the impact on inflation is limited,” Oyedele explained.