Inflation Will Defy CBN’s Monetary Policy Efforts, To Hit 21.6%– Cape

Cape Economic Research and Consulting has predicted a surge in Nigeria’s inflation amidst the Central Bank of Nigeria’s Monetary tightening stance.


CAPE said inflation will rise from 21.47 per cent in November to 21.6 per cent in December and will not abate in the short-run.

The US-based research firm said this in its economic outlook sent to THE WHISTLER.

According to CAPE, Nigeria’s output growth is expected to further slowdown which is in line with the World Bank forecast that the economy will slow by

It said, “Inflation is expected to rise further in December 2022. Our forecast showed that inflationary pressure would remain heightened, but at a moderated speed as headline and food inflation are expected to rise to 21.6 per cent, and 24.2 per cent respectively, while core inflation is forecasted to moderate to 17.4 percent.”

Inflation forced the CBN to hike Monetary Policy Rate to 16.5 per cent in November 2022 from 11.5 per cent held at the beginning of the same year.


The apex bank governor, Godwin Emefiele believes the monetary policy stance will check the surging prices.

Cape said, “The key drivers of the headline inflation forecast were, food prices, exchange rate, and housing and utilities which contributed 5.98 percent, 1.96 percent, and 0.31 percent, respectively.

“Our analysis showed that the magnitude of the impact of food prices on headline inflation persisted, while that of exchange rate and housing and utilities moderated and heightened respectively in December 2022 when compared with November 2022.

“The moderation in the speed of inflation is due to strong pull factors which are largely monetary factors that are dampening the heightening inflationary pressure. Key pull factors are money supply (M2), narrow money (M1), credit to the core private sector, and credit to other sectors which contributed 0.93, 0.54, 0.46, and 0.35 percent respectively in moderating the speed of inflation in December 2022.

“In addition, our analysis showed some overlapping interrelationships between headline and core inflation through monetary factors. We found that money supply (M2) contributed 0.93 and 0.01 percent in moderating headline and core inflation respectively.”


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