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Abstract:One-third of Lagosians' salary is spent on food, according to another survey. Analysts claim that rising fuel and diesel prices are a major cause of inflation. Since 2015, government investment and consumption have fueled economic development.
One-third of Lagosians' salary is spent on food, according to another survey. Analysts claim that rising fuel and diesel prices are a major cause of inflation. Since 2015, government investment and consumption have fueled economic development.
Nigerian headline inflation will hit thirty percent by December 2023, according to global professional services network KPMG, ahead of tomorrow's (Tuesday) National Bureau of Statistics (NBS) release of October 2023 inflation numbers. As of right now, Nigeria's September inflation rate stands at 26.72 percent.
The current economic inflationary pressure is expected to last into H2 2023, according to KPMG's “Macroeconomic Review H1 2023 & Outlook for H2 2023,” which was released over the weekend. The report emphasized that headline and food inflation are unlikely to go down anytime soon because the depreciation of the Naira will continue to reinforce the inflationary impact of the removal of fuel subsidies through higher input prices and production costs brought on by imported inflation.
According to the report, the impending increase in the cost of goods and services is expected to be caused by recent changes in the petroleum business, such as the elimination of gasoline subsidies and the unification of the foreign exchange market.
The research went on to say that the Nigerian economy will expand by 2.6% in 2023, which would be less than the 3.1% growth rate in 2022 and the 2.8% growth rate that the World Bank had updated for Nigeria in 2023.
The body did note, however, that this puts the administration in a difficult situation because, in addition to creating questions about monetary independence, encouraging the private sector by lowering interest rates has the reverse effect on domestic price stability.
This comes days after Afrinvest West Africa analysts predicted in their October 2023 inflation estimate that Nigeria's headline inflation rate would rise to 27.9% in October 2023.
The business projected that Nigeria's CPI will rise by a further 102 basis points in October 2023, following a 16-year high of 26.72% in September 2023. The decline of the FX rate in both official and unauthorized markets is connected to the surge.
October is expected to follow previous months when food has been the main driver of the CPI increase. This is because transportation costs for agricultural goods have increased. On the other hand, the research indicates that October saw an increase in food supplies because of the ongoing harvest season.
The research also emphasizes how a major factor in October 2023's core inflation is the growing prices of diesel (AGO) and petroleum motor spirit (PMS).
Another study reveals that Lagos State inhabitants now spend a sizeable amount of their income on food and groceries due to the country's rising inflation rate and the ensuing repercussions on its citizens. The report states that the cost of stew components in Lagos increased 16.77 percent from ₦6,902 in 2022 to ₦8,060 in 2023. In 2023, a minimum wage worker in Lagos earning ₦30,000 a month would require at least 106% of their income to make stew once a week for a month.
The first Stew Index Report, created by PricePally, an online grocery store that operates in three Nigerian cities, examined the cost of the components for stews and concluded that, with Lagos now being the most expensive state in the nation, the cost of beef has also increased dramatically.
In the short run, it is anticipated that the increased funding from the FAAC will also cut down the rate of debt buildup and lower fiscal deficits. But the top priorities should be government accountability, openness, and effective fiscal gain management. Nevertheless, oil theft continues to pose a serious threat to the government's ability to generate money because it results in significant losses for the state.
The government would need to step up its efforts to combat oil theft through a multifaceted strategy that includes adopting stronger security measures, increasing community empowerment and engagement, and making use of cutting-edge surveillance technology in order to reduce this risk, according to the statement.
In addition, KPMG stated that for H2 2023, watch out for the Dangote Refinery's start of operations, the Central Bank of Nigeria's (CBN) adoption of crucial reforms to address issues with foreign exchange illiquidity, the government's fiscal and trade agenda, as well as reforms throughout MDAs.
KPMG had earlier stated in its domestic marco-economic analysis that significant changes in the growth pattern of the Nigerian economy have occurred throughout the past 20 years. It was noted that the economy expanded by six to seven percent between 2000 and 2015, a period during which private investment accounted for seventy percent of all economic investments.
However, the accounting company claimed that over the previous eight years, the economy grew by an average of 1.1% due to a new growth strategy that strengthened the public sector's dominance. KPMG noted that government investment and consumption have been the main drivers of the economy's development since 2015.
It clarified that the economy expanded by 2.4% in H1 2023, a lower growth rate than the 3.3% growth rate noted in H1 2022. According to the report, the economy grew very little from 2.3% in Q1 2023 to 2.5% at the end of Q2 2023 on a quarter-over-quarter basis.
Reiterated by KPMG, the non-oil sector continues to represent the backbone of the Nigerian economy, with economic activity propelled by its growth and accounting for about 95% of GDP.
It stated that in Q2 2023, the non-oil industry expanded by 3.6%, while the oil sector, which had been declining since Q1 2020, was forced into a deeper recession by 13.43%.
KPMG reports that in Q2 2023, Finance & Insurance accounted for 27% of the non-oil sector growth, followed by Information & Communication (8.6%), Construction (3.4%), and Manufacturing (2.2%).
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The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
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