Inflation rate in Nigeria eases to 33.40% in July, according to the National Bureau of Statistics (NBS) report. However, the decrease in inflation does not reflect in the cost of goods such as fuel, transportation, and basic food items. Additionally, the exchange rate of the Naira has further increased to N1, 600/$.
The NBS released a report stating that Nigeria’s headline inflation rate declined to 33.40% in July, marking the first decrease in one year.
The report, based on the NBS Consumer Price Index (CPI) and Inflation Report for July, shows a 0.8% decrease compared to the previous month’s rate of 34.19%.
On a year-on-year basis, the inflation rate in July 2024 was 9.32% higher than the rate in July 2023. On a month-on-month basis, the inflation rate in July was 2.28%, slightly lower than June’s rate of 2.31%.
Despite the reported decrease in inflation, the NBS attributes the increase in the headline index to the rise in prices of goods and services at the divisional level, particularly in food, non-alcoholic beverages, housing, transportation, and other essentials.
The average Consumer Price Index for the 12 months ending in July 2024 showed a 30.76% increase compared to the previous corresponding 12-month period.
Food inflation in July 2024 rose to 39.53% on a year-on-year basis, primarily due to the increased prices of semovita, yam flour, wheat flour, yam, Irish potatoes, water yam, and other food items.
The surge in inflation and rising food prices can be attributed to factors such as FX fluctuations, soaring energy costs, conflicts in food-producing regions, reduced arable land, climate variability, increased cost of transportation, insecurity, and restrictions on foreign exchange for certain food items.
Furthermore, the scarcity and surge in fuel prices have contributed to the upward trend in transportation costs and consequently the cost of goods in the open market.
Meanwhile, the exchange rate of the Naira continues to face significant pressure, despite efforts by the Central Bank of Nigeria (CBN) to stabilize it through interventions like the reintroduced retail Dutch Auction System (rDAS). The Naira currently exchanges at approximately N1,600/$1 in the unofficial market.
President Bola Tinubu has announced that there will be a suspension of duties, tariffs, and taxes on the importation of certain food commodities through land and sea borders, with the aim of reducing food prices. The Minister of Agriculture and Food Security, Senator Abubakar Kyari, has also assured that food prices will significantly drop within the next 180 days.