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Inflation, Food Prices Expected to Decline Starting July – Rewane

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A well-respected analyst Bismarck Rewane, CEO of Financial Derivatives, has forecasted a decline in both inflation and food prices starting from July to August 2024.

This prediction follows Nigeria’s headline inflation rising to 33.95 percent and food inflation to 40.66 percent in May, marking the 17th consecutive month of increases.

Speaking in an interview with Channels Television on Thursday, Rewane outlined factors contributing to this anticipated downturn.

He emphasised that the Central Bank of Nigeria’s aggressive management of money supply growth and improved efficiency in managing crude oil revenue would play pivotal roles in stabilising economic indicators.

“The rate of increase in price level has begun to slow, indicating that inflation will likely begin to decline from July to August. There is a flicker of light at the end of the tunnel,” Rewane stated optimistically.

While noting that the decrease may not be drastic initially, he highlighted the potential impact of policies regarding minimum wage adjustments on inflation trends.

He stressed the importance of sustained efforts in managing economic fundamentals to sustain this positive trajectory.

“Generally speaking, the dark days are coming to an end, and a few bright lights will start shining as we go into the end of the year,” Rewane concluded, suggesting cautious optimism for Nigeria’s economic recovery in the latter half of 2024.

The forecast by Rewane provides a glimmer of hope for Nigerians grappling with soaring living costs, offering prospects of relief in the months ahead pending effective economic management strategies.

The economy is deeply intertwined with its oil sector, which not only serves as a crucial source of government revenue but also underpins foreign exchange earnings. However, the country’s fiscal stability remains vulnerable to fluctuations in global oil prices, which directly impact its economic outlook.

Compounding this reliance on oil, government expenditure has frequently outpaced revenue, leading to persistent budget deficits and increased borrowing. This fiscal imbalance has strained public finances, hindering investments in vital infrastructure and essential social services.

The naira has depreciated significantly against major currencies, triggering inflationary pressures that have eroded purchasing power and strained household budgets. Factors contributing to this currency depreciation include supply chain disruptions, fiscal deficits, and external economic shocks.

High inflation rates have become a persistent issue, further exacerbated by the depreciation of the Naira. This has had adverse effects on living standards and business operations, posing challenges to economic stability and growth prospects.

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