KPMG Forecasts 30% Inflation for Nigeria by December 2023: Insights and Projections

KPMG, in its macroeconomic review for the first half of 2023, has projected a significant rise in Nigeria’s headline inflation, estimating it to reach 30% by December 2023. This prediction is attributed to recent reforms, including the removal of fuel subsidies and the unification of the foreign exchange market. The insights provided shed light on the potential economic challenges and call for strategic measures to address the looming inflationary pressures.

The Driving Forces: Fuel Subsidy Removal and FX Market Unification

KPMG’s model suggests that the combined impact of fuel subsidy removal and foreign exchange liberalization will be instrumental in driving headline inflation to the projected 30% mark. These reforms, implemented to address economic complexities, are expected to have a profound impact on the inflationary landscape.

Current Inflation Scenario

As of September, Nigeria’s existing headline inflation rate stood at 26.72%, according to the National Bureau of Statistics. This existing high inflation rate sets the stage for the potential surge predicted by KPMG in the coming months.

Addressing Inflation: Beyond Interest Rate Hikes

The report challenges the conventional approach of relying solely on interest rate hikes to control inflation. It suggests that addressing fundamental issues such as energy and transportation costs, supply chain challenges, and promoting local production will be more effective in curbing the rising inflationary trend. This perspective advocates for a comprehensive and strategic approach to tackle the root causes of inflation.

Economic Growth Projections

KPMG’s review also anticipates a growth rate of 2.6% for Nigeria’s economy in 2023. This projection, lower than the World Bank’s forecast of 2.8%, reflects the potential impact of recent reforms, including fuel subsidy removal and FX market unification. The report notes that these reforms may contribute to a decrease in GDP growth compared to the previous year.

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Second-Half Challenges and Negative Repercussions

The challenges faced in the first half of 2023, such as the unsuccessful naira redesign policy, sluggish growth linked to low crude oil output, elevated inflation, and fuel subsidy removal, are expected to cast negative repercussions in the second half of the year. These factors create a complex economic landscape that requires careful navigation.

Inflation Surge and Policy Connections

The continuous surge in Nigeria’s inflation over the past nine months is closely linked to President Tinubu’s fuel subsidy removal and currency market reforms. Understanding the intricate connections between policies and economic indicators is crucial in formulating effective strategies for sustainable economic growth.


As Nigeria grapples with the challenges outlined in KPMG’s macroeconomic review, policymakers and stakeholders are urged to adopt holistic measures that go beyond conventional monetary tools. Addressing the root causes of inflation and creating a resilient economic environment are paramount for steering the country toward sustainable growth.


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