2024 outlook: Persistent inflation challenges in African economies

The latest inflation data for Nigeria and Kenya, reflecting December 2023 and January 2024, respectively, is scheduled for release before the end of this month. 

In anticipation, our report today examines the key factors fueling inflation in both economies, presenting an in-depth outlook for 2024. This analysis is underpinned by insights from the Stears Pan-African Inflation Forecast, an intelligence tool that provides monthly inflation projections for Nigeria and Kenya based on a robust set of macroeconomic variables. 

In 2023, pivotal changes in central bank leadership marked a significant year for Nigeria and Kenya, leading to substantial shifts in their monetary policy frameworks. In Kenya, the Central Bank of Kenya (CBK) governor, Kamau Thugge, changed the monetary policy approach to inflation targeting from monetary aggregates and has since embarked on forward guidance to tame inflation. The bank has an inflation target of 5±2.5% instead of adjusting the money supply. 

Meanwhile, Nigeria’s