Diamond Bank’s inflation outlook for Nigeria

Chigozier Muogbo, the Head of Research and Economic Intelligence at Diamond Bank, recently appeared on CNBC Africa to discuss the outlook for Nigeria's inflation in the year 2019. Muogbo painted a picture of a challenging year ahead with inflation predicted to remain in the double digits, specifically around the 12.3% to 12.5% range. Several factors were highlighted as drivers for this projection. The upcoming elections were identified as a major source of increased spending by political parties and consumers, leading to a surge in demand and subsequently contributing to rising inflation. Additionally, the Central Bank of Nigeria is expected to absorb excess liquidity in the market, impacting inflation rates. The volatility in food prices, exchange rates, and import market conditions were also deemed significant determinants of the inflation outlook for 2019. Despite the potential challenges, Muogbo acknowledged that inflation is not necessarily negative, but the current levels above 12% pose a concern that needs to be addressed by policy authorities. Looking ahead, Muogbo expressed skepticism about achieving single-digit inflation in the near future, citing structural issues such as weak manufacturing capabilities and infrastructure challenges. While the goal is to reduce inflation to a healthier range of 2% to 5%, Muogbo emphasized the need for fundamental changes to be implemented to reach this target. Overall, the discussion highlighted the complexities surrounding Nigeria's inflation trajectory in 2019 and the imperative for proactive measures to stabilize the economy.