Subsidy Removal: Analysts Predict 30-40% Inflation Figures for June

Nume Ekeghe

Analysts have predicted that the impact of the petrol subsidy removal would see inflation figures in the month of June hover between 30 to 40 per cent.

The view of the former Statistician-General of Nigeria Dr. Yemi Kale is that June’s figures when released would see inflation soar to 30 per cent because of the ripple effect petrol would have on other food and services pricing.

However, the Head of Financial Institutions Ratings at Agusto&Co, Ayokunle Olubunmi, was more aggressive in his prediction stressing that it could reach 40 per cent for the month of June due to the removal of petroleum subsidy.

Kale in a tweet over the weekend noted that the new petrol price could add about 6 per cent to the Consumer price index (CPI) for June compared to his expectations for May CPI.

Kale stated: “Using the NBS CPI model plus my macro model, the new PMS prices may add about 6 per cent to CPI in June over whatever is reported in May, holding other things constant. April was 22.22 per cent and May is unknown and won’t be affected. So June will be somewhere about 30 per cent. Not as bad as I expected.” he said.

Olubunmi stated that this removal is needed and is a policy that is pivotal, he also noted that inflation would initially hike but would eventually come down.

Olubunmi added that the removal of petrol subsidies marks a significant milestone for Nigeria’s energy landscape and economic growth and that while the short-term challenges are evident, the long-term benefits of this decision outweigh the initial difficulties.

He noted that by redirecting funds toward crucial sectors, encouraging investment in renewable energy, and curbing corruption, Nigeria has positioned itself on a path towards a sustainable and prosperous future.

He said: “In a country where you are already having an inflation of 22 per cent, and you want to move fuel price from roughly N200 per litre to something between N600 to N700 per litre, inflation will jump as high as even 40 something percent although it will come down eventually.”