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Inflation Soars To 24.08% While Nigerians Grapple With Elevated Food Costs

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Inflation Soars To 24.08% While Nigerians Grapple With Elevated Food Costs
Inflation Soars To 24.08% While Nigerians Grapple With Elevated Food Costs

Nigeria experienced a surge in its annual inflation rate, reaching 24.08% in July. This marked the highest level in the past 18 years, primarily propelled by the escalating prices of essential food items and increased transportation costs. This situation reflects the growing difficulties faced by households in meeting their daily nutritional needs. The challenges have been exacerbated by the removal of fuel subsidies and the continuous devaluation of the national currency.

This elevated inflation rate, representing an increase of 1.29 percentage points from the previous month’s 22.79%, was predominantly triggered by the heightened costs of fundamental food products. These included items such as fats and oils, bread, cereals, fish, potatoes, yam, fruits, meat, vegetables, dairy, cheese, and eggs.

As a consequence, the food inflation rate reached a peak of 26.98%, marking its highest level in nearly two decades since September 2005.

Furthermore, the effects of removing fuel subsidies were evident in the cost of transportation and related services, leading to a core inflation rate (excluding farm produce and energy) of 20.47% in July. This rate was the highest in 19 years, rising by 0.41 percentage points from June’s 20.06%.

READ MORE: Bank Of America Cautions That Nigeria’s Inflation Could Potentially Reach 30%

The National Bureau of Statistics disclosed these findings in its Consumer Price Index report for August. It noted that the escalation in prices of food and non-alcoholic beverages contributed the most (12.47%) to the overall rise in the headline inflation rate to 24.08% in July. This was followed by increases in the costs of housing, water, electricity, gas, and other fuels (4.03%); clothing and footwear (1.84%); transportation (1.57%); as well as household furnishings, equipment, and maintenance (1.21%).

The NBS stated, “In July 2023, the headline inflation rate rose to 24.08% compared to the June 2023 rate of 22.79%. Looking at the changes, the July 2023 headline inflation rate exhibited an increase of 1.29% points compared to June 2023.”

On a year-on-year basis, the headline inflation rate was 4.44% points higher compared to July 2022, reflecting a rise from 19.64% to 24.08%.

Additionally, the report indicated that the food inflation rate in July 2023 was 26.98% on a year-on-year basis, marking a 4.97% point increase from July 2022.

Core inflation, which excludes volatile agricultural produce and energy prices, reached 20.47% in July 2023 on a year-on-year basis. This was a notable uptick from the 16.06% recorded in July 2022.

Experts expressed concern over the impact of these inflation figures. Dr. Muda Yusuf, CEO of the Center for Promotion of Private Enterprise, emphasized that the removal of fuel subsidies and currency depreciation severely affected citizens’ welfare and small businesses’ health.

Analysts at Comercio Partners, a Lagos-based investment banking firm, projected that the upward trajectory of inflation would persist due to ongoing insecurity affecting food prices. They pointed to challenges such as the disruption of the Northern Green Harvest due to security concerns and flooding, as well as increasing costs of imported goods due to exchange rate fluctuations.

In conclusion, Nigeria’s inflation surge to 24.08% in July was driven by elevated food prices, heightened transportation costs, and the removal of fuel subsidies, further straining citizens’ well-being and business vitality. The outlook for inflation remains uncertain due to ongoing security issues, exchange rate volatility, and other factors.

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