FDC sees slowdown in Nigeria’s inflation to 21.8% in March

Financial Derivatives Company (FDC) has forecasted that Nigeria's headline inflation rate for the month of March is likely to slow down to 21.8 per cent. Halimah Adediran, Senior Researcher at FDC, provided an in-depth analysis of the key drivers behind this forecast during an interview with CNBC Africa. Adediran explained that a combination of factors, including exchange rate appreciation, improved cash availability in the economy, and moderation in import prices, are expected to contribute to this decline in inflation. The forecast also anticipates a flat month-on-month inflation rate, influenced by policy measures aimed at stabilizing prices. Additionally, a dip in core inflation is predicted, largely driven by a slight appreciation in Nigeria's local currency. The recent fluctuations in inflation have been closely monitored by analysts, raising questions about the appropriate response from fiscal and monetary authorities. Adediran suggested that a sustained trend of declining inflation would be necessary for the Monetary Policy Committee (MPC) to consider adjusting their policy stance. While uncertainties loom due to potential policy changes under a new administration, such as the removal of petrol subsidies, and global market dynamics like the recent OPEC supply cut, Adediran emphasized the need for a cautious approach until a clear trend emerges. The discussion highlighted the interconnected nature of various economic indicators and the delicate balance required in policymaking to manage inflationary pressures effectively. Adediran's insights provided valuable perspectives on the complex factors influencing Nigeria's inflation outlook and the importance of prudent policy responses in navigating uncertain economic conditions.