With a 15.63% inflation rate in December and a FY 2021 Inflation rate of 16.9%, the CBN prediction that inflation would moderate to 13% by the end of 2021 has failed to hold. This has wider implications for households and businesses. Despite, an eight-month downward streak in inflation, annual inflation remained high diminishing the purchasing power of the average Nigerian household while also depleting the capacity of businesses to replenish their capital thereby discouraging investment of all forms.
Analytsts note that imported inflation needs to be addressed frontally if Nigeria would ever get a chance at growth. Monetary and fiscal authorities need to work together to address the poor infrastructure that accounts for the structural/supply-side inflation. From insecurity, complex cargo clearing logistics at the ports, taxes levied by non-state actors and a generally weak set of institutions.
The International Monetary Fund (IMF) projects that Nigerian Inflation would be one of the seven highest in Sub-sahara in 2022 and one of the highest globally, while this is partly due to expected increase in food prices, the reality is that at the very base of inflationary worries especially in developing and emerging economies is the productivity problem. In these economies, government spending needs to be precise in terms of impact otherwise the problem becomes worse.