Nigeria’s headline inflation increased again in February to 12.2%, largely driven by the base year effects of the border closure. While it seems like the gradient of the inflation curve is easing, the trajectory may change in subsequent months as the VAT increase becomes more manifest and the negative economic impact of COVID-19 kicks in.
The MPC has its work cut out for it as it meets next week (March 23/24). It faces a dilemma of cutting interest rates and providing a stimulus package like the USA and Egypt or adjusting interest rates in line with the rising inflation trend.
In the publication, the FDC Think Tank shares its thoughts on the impact of February’s inflation numbers on the economy and likely policy decisions.
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