Nigeria inflation remains high at 33.95% despite month-on-month slowdown

Nigeria’s annual inflation rate ticked up to 33.95 percent in May.

However, month-on-month headline inflation slowed to 2.14 percent in May 2024 from 2.29 percent in April 2024 which is the second broad-based decline since October 2023.

According to the National Bureau of Statistics, inflation quickened to 33.95 percent May 2024 from 33.69 percent in April 2024, for the seventeenth consecutive month driven by food and non-alcoholic beverages.

The Financial Derivatives Company, an economic think-tank, had predicted that headline inflation would increase by 0.63 percent to 34.32 percent from 33.69 percent in April.

It stated that the increase in price level combined with other exogenous factors, such as the proposed minimum wage review and increase in the rate of money supply, shows that price inflation is still very potent.

Money supply growth (M3), which declined in March by 10.26 percent to N92.34 trillion has reversed itself, jumping by 3.98 percent to N96.97 trillion in April, posing a major threat to the inflation trajectory. Research findings show that every 1 percent increase in money supply will lead to a 0.22 percent increase in headline inflation

The NBS noted that the top five contributors of inflation are food & non-alcoholic beverages 17.59 percent, housing, water, electricity, gas & other fuel 5.68 percent, clothing & footwear 2.60 percent, transport 2.21percent and furnishings & household equipment & maintenance 1.71 percent.

Food inflation also rose by 15.84 percent to 40.66 percent, year-on-year. This was a result of an increase in the rate of the average prices of Potatoes, Yam & Other Tubers, Bread and Cereals, Fish, Meat, Fruit, coffee, tea, and Vegetables according to the report.