UPDATED: Nigeria’s inflation rate eases first time in 19 months

Nigeria’s annual inflation rate in July eased after a persistent rise in nearly two years.

Inflation rate eased to 33.40 per cent in July 2024 compared to 34.19 per cent in June, the National Bureau of Statistics (NBS) announced Thursday.

Inflation indicators compare prices of goods and services in 12 months. A decline does not necessarily imply a reduction in prices; instead, it shows the rate of price increase had fallen compared to previous months.

According to the NBS, the July headline inflation rate showed a decrease of 0.8 per cent points when compared to the June 2024 headline inflation rate. The lowest figure in 2024 was 29.90 per cent, recorded in January.

National Bureau of Statistics (NBS)

This also marks the first decline in headline inflation rate since it eased to 21.34 per cent in December 2022.

On a year-on-year basis, the headline inflation rate was 9.32 per cent points higher compared to the rate recorded in July 2023, which was 24.08 per cent.

“This shows that the headline inflation rate (year-on-year basis) increased in July 2024 compared to the same month in the preceding year (i.e., July 2023),” the NBS said.

The bureau also said on a month-on-month basis, the headline inflation rate in July 2024 was 2.28 per cent, which was 0.03 per cent lower than the rate recorded in June 2024 (2.31 per cent).

This, it said, means that in July 2024, the rate of increase in the average price level was lower than the rate of increase in the average price level in June 2024.

According to the report, the food inflation rate in July 2024 was 39.53 per cent on a year-on-year basis, 12.55 per cent points higher compared to the rate recorded in July 2023 (26.98 per cent).

The country’s food prices have been rising sharply in recent years, a situation that worsened in 2023 when President Bola Tinubu removed petrol subsidies and allowed the naira to float.

President Bola Ahmed Tinubu

This economic shift has led to a steep increase in the cost of staple foods pushing many Nigerians further into poverty and heightening food insecurity.

The persistent surge in prices over the past year has led to the closure of several farms and businesses, with many agricultural producers scaling back their output due to insecurity and unpredictable weather conditions affecting rural areas.

In response, Mr Tinubu declared a state of emergency on food insecurity in July last year, aiming to combat rising food costs. Despite these efforts, food inflation has continued unabated.

Last month, Mr Tinubu unveiled some proactive measures meant to address skyrocketing food prices in the country. Amongst it, is the decision to suspend duties, tariffs, and taxes on the importation of essential food items such as beans, wheat, and husked brown rice.

Details

In its inflation report Thursday, the NBS said the contributions of items on the divisional year-on-year level to the increase in the headline index are “food & non-alcoholic beverages (17.30 per cent), housing, water, electricity, gas & other fuel (5.59 per cent), clothing & footwear (2.55 per cent), and transport (2.17 per cent).”

Others are “furnishings & household equipment & maintenance (1.68 per cent), education (1.32 per cent), health (1.00 per cent), miscellaneous goods & services (0.56 per cent), restaurant & hotels (0.40 per cent), alcoholic beverage, tobacco & kola (0.36 per cent), recreation & culture (0.23 per cent) and communication (0.23 per cent).”

The percentage change in the average CPI for the twelve months ending July 2024 over the average of the CPI for the previous twelve-month period was 30.76 per cent, showing an 8.84 per cent increase compared to the 21.92 per cent recorded in July 2023.

Food inflation

The NBS said the rise in good inflation on a year-on-year basis was caused by increases in prices of semovita, yam flour (prepacked), Wheat Flour (prepacked), etc (bread and cereals class), yam, Irish potatoes, water yam, etc (potatoes, yam & other tubers class), groundnut oil, palm oil, etc (oil & fats class) and milo, bournvita, ovaltine (coffee, tea & cocoa class), etc.

READ ALSO: Nigeria’s inflation rate exaggerated, says APC National Secretary Basiru

On a month-on-month basis, according to the bureau, the food inflation rate in July 2024 was 2.47 per cent which shows a 0.08 per cent decrease compared to the rate recorded in June 2024 (2.55 per cent).

“The average annual rate of Food inflation for the twelve months ending June 2024 over the previous twelve-month average was 36.36 per cent, an 11.90 per cent points increase from the average annual rate of change recorded in July 2023 (24.46 per cent),” the report said.