(Bloomberg) — Nigeria inflation expected to accelerate in coming months, peaking close to 18% year-on-year in Q2 2021,” Dylan Smith and Andrew Matheny, analysts at Goldman Sachs says in a research note.
Country inflation outlook raised to 13.7% for this year from 12.5% and 17.1% for 2021 from 11.5% previously.
“This has pushed transactions into the parallel market, where the exchange rate is significantly weaker. The removal of a long-standing official fuel subsidy in April has also contributed to inflation linked to import prices in recent months”
Long-term implications of rising inflation will depend on its persistence. But with inflation expectations rising, a central bank policy aimed at boosting credit growth, and FX availability still constrained, “there is a chance the shock proves persistent. In this case, a larger naira depreciation may be required to re-balance the economy” the analysts say. To contact the reporter on this story:
Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net.
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