- Headline inflation in Nigeria declined for the first time in 19 months by 0.79 per cent to 33.40 per cent in July 2024
- Food inflation rate also declined to 39.53 per cent in July from 40.87 per cent in June due to a decline in the prices of food items
- Analysts had predicted a slowdown in the inflation rate, given recent government interventions and the commencement of the harvest season
Nigeria’s headline inflation rate, which measures the average change in the prices of goods and services over time, has dropped to 33.40 per cent in July 2024 from 34.19 per cent recorded in June 2024.
The 0.79 percentage month-on-month drop is the first decline in the headline inflation rate since December 2022, when it last dropped to 21.34 per cent.
This was contained in the National Bureau of Statistics’ (NBS) Consumer Price Index (CPI) report for July 2024 released on Thursday, August 15.
The report also noted that the food inflation rate in July 2024 stood at 39.53 per cent from 40.87 per cent recorded in June 2024. On a year-on-year basis, the food inflation rate is 12.55 percentage points higher than the 26.98 per cent recorded in July 2023
On a year-on-year basis, the July 2024 headline inflation is 9.32 percentage points higher than in July 2023 when it stood at 24.08 per cent.
On a month-on-month basis, the headline inflation rate in July 2024 was 2.28 per cent, slightly lower than the 2.31 per cent recorded in June 2024.
The NBS stated, “In July 2024, the headline inflation rate eased to 33.40 per cent relative to the June 2024 headline inflation rate of 34.19 per cent. Looking at the movement, the July 2024 headline inflation rate showed a decrease of 0.8 per cent points when compared to the June 2024 headline inflation rate.
“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).”
Decline in food inflation follows month-on-month decline in food prices
The NBS also stated that on a month-on-month basis, the food inflation rate in July 2024 was 2.47 per cent, a 0.08 per cent decrease compared to the rate of 2.55 per cent recorded in June 2024.
It attributed the decrease to the reduction in the average prices of such items as tin milk, baby powdered milk, etc. (under milk, cheese and egg class), mudfish fish, fresh fish (obokun), snail, etc. (under fish class), date palm fruit (debenu), watermelon, etc. garri, akpu (fufu), etc. (under bread and cereals class), exercise books, textbooks, etc. (under books and stationeries’ class) and turkey meat, minced pork, etc. (under meat class).
The food inflation rate in July 2024 was 39.53 per cent on a year-on-year basis, representing a 12.55 percentage point increase compared to the rate of 26.98 per cent recorded in July 2023.
The NBS said the rise in food inflation on a year-on-year basis was caused by increases in prices of the following items: Semovita, yam flour (pre-packed), wheat flour (pre-packed), etc. (bread and cereals class), yam, Irish potatoes, water yam, etc. (potatoes, yam and other tubers class), groundnut oil, palm oil, etc. (oil and fats class) and Milo, Bournvita, Ovaltine (coffee, tea and cocoa class), etc.
The average annual rate of food inflation for the 12 months ending June 2024 over the previous 12-month average was 36.36 per cent, an 11.90 percentage point increase from the average annual rate of change of 24.46 per cent recorded in July 2023.
Analysts predicted slowdown in headline inflation by year-end
Recall that TheRadar reported that analysts predicted a slowdown in the headline inflation rate in the third quarter (Q3) of 2024 and by year-end.
They hinged this on the recent interventions by the government like the 150-day import duty suspension on staple foods, which the Nigeria Customs Service (NCS) reiterated and began implementing this week. Although the NCS said the policy will cost the country an estimated N188.37 billion in revenue, it has also given guidelines for participation in the exercise.
Also, the government dispatched 740 rice trucks to states, 20 trucks for each of the 36 states and the Federal Capital Territory, Abuja, aimed at reducing the prices of staple food.
The commencement of the harvest season is another factor analysts said contributed to the slowdown in headline inflation in July 2024.
United Capital estimates headline inflation to settle at 27.5 per cent by December 2024, higher than CBN’s 21.4 per cent target, “assuming no significant shocks to domestic prices. We anticipate that prices may moderate in Q3 2024 due to the unwinding of statistical base effects and the primary harvest season in late Q3 24 and early Q4 24. However, risks to consumer prices remain on the upside, including potential below-average harvests, minimum wage increases and FX volatility.”
The Nigerian Economic Summit Group (NESG) expects inflation to remain elevated “with a likely slowdown in the near term due to the base effect, the discontinuation of the Central Bank of Nigeria’s price verification system and the 150-day suspension of import duties on staple foods.
“However, the upside risks will likely prevail if infrastructural deficits, insecurity, low agricultural production, high input costs and rising energy costs are not proactively addressed.”
Tracing Nigeria’s inflation: A tenure-by-tenure breakdown from 1960 to present
Meanwhile, TheRadar reported that following the recent Sallah celebration, Nigerians have complained of the soaring inflation rate and its impact on food prices, saying it is the most acute in recent years.
Using data from the NBS, TheRadar did a tenure-by-tenure analysis of the inflationary trend in Nigeria from 1960 to the present.
