IMF projects worsening inflation in Nigeria, other developing countries
The International Monetary Fund (IMF) on Friday projected that higher housing cost, food supply disruption and other economic factors would push inflation up in Nigeria and other developing countries by the end of this year.
The Bretton Woods institution which made this known in its weekly report said that the inflation rate would rise higher in Nigeria and other emerging markets than in the developed countries.
“The annual inflation for developed countries was initially projected to hit 3.6 percent in 2020 while in Nigeria and other developing nations, it would peak at 6.8 percent.
“However, the inflation rate is expected to ease to 2 percent by 2022 in advanced economies, and revert to 4 percent in emerging markets,” it said.
IMF said it based its forecast on the rise in cost of housing and continued supply chain disruptions which had been evident in Nigeria following herdsmen and farmer clash as well as bandits attack on the highway in the Northern part of the country.
According to the influential international financial institution, currency depreciations are also factors that will aid the projected inflation rates.
It also said the aftermath of the COVID-19 pandemic on the economies which triggered a recession in most countries across the world, was a contributing factor to grim economic future as projected as countries continue to grapple with its devastating consequences.
This prediction came at a period Nigeria’s inflation rate contracted five months consecutively, settling at 17.01 percent in August from 17.38 percent recorded the previous month.
“The projections, however, come with considerable uncertainty, and inflation may be elevated for longer.
“Contributing factors could include surging housing costs and prolonged supply shortages in advanced and developing economies, or food-price pressure and currency depreciations in emerging markets.
“Food prices around the world jumped by about 40 percent during the pandemic, an especially acute challenge for low-income countries where such purchases make up a big share of consumer spending.
“Simulations of several extreme risk scenarios show prices could rise significantly faster on continued supply chain disruptions, large commodity price swings, and a de-anchoring of expectations,” the IMF added.