Nigeria’s annual inflation rate rose for the seventh straight month, nearing an 18-year high of 24.08 percent in July 2023, according to the latest inflation report released on Tuesday.
The report published by the National Bureau Statistics (NBS) said the inflation rose to 24.08 percent in July 2023 from 22.79 percent in the previous month and the food inflation rate quickened to 26.98 percent in July from 25.25 percent in the previous month.
“Looking at the movement, the July 2023 headline inflation rate showed an increase of 1.29 percent points when compared to June 2023 headline inflation rate,” it said.
Analysts had expected July’s inflation rate to accelerate further on the back of the high petrol prices occasioned by the subsidy removal and naira devaluation.
“Apart from the sustained uptick in the general price level, the slope of the inflation curve is becoming steeper (i.e. the rate of change in inflation is increasing). This is an indication that the impact of recent policy changes is becoming more evident,” analysts at Financial Derivatives Company Limited, led by economist Bismarck Rewane said in a recent economic bulletin.
They said in a period of one month, the price of petrol has increased twice, first to N488/ltr and then to N617/ltr.
“Diesel price is also up 5.88 percent to N720/ltr from N680/ltr, pushing up transport and logistics costs. They said in addition, the naira touched an all-time low of N893/$ at the parallel market.”
Analysts at Capital Economics added that inflation will accelerate as previously expected due to the removal of fuel subsidies.
“Our view remains unchanged that the removal of the fuel subsidy will add around 4.5 percentage points to headline inflation. The effects of the fall in the naira will have continued to feed through too,” they said.
Since May 29, when President Bola Tinubu announced the removal of the petrol subsidy, petrol prices have tripled to N617, while the value of the naira has plunged following the floating of the currency.
The floating of the currency has increased the official rate from N463.38/$ to N740.60/$ as at Friday. The gap between the official and black market expanded to N200.
It is getting difficult daily for Nigerians, especially with the recent petrol subsidy removal and naira float and other reforms the Tinubu’s led-government is doing, Demola Balogun, a Lagos-based mechanic, said.
“They are good reforms but they are seriously hurting Nigerians and businesses. My family can’t even afford to eat thrice daily anymore as prices keep soaring,” he said.
Mathias Ebie, a civil engineer with Hitech Construction Company, noted that he has introduced cost-cutting measures at home.
“I told my children that this is not the time for ice creams and meat pies, and eating out often. They are not happy, but I told them we need to save to ensure they go to school and that impressed them. It is no longer the bread-and-butter breakfast, eat whatever the kitchen offers,” he said.
June’s inflation rate rose marginally as it did not capture the impact of the subsidy removal and naira devaluation.
“This is because the data collection for computing the rate for the reference month typically stops around the middle of the month, meaning that the June numbers only reflects approximately two weeks of the policy impact on consumer prices,” NBS tweeted via Twitter handle last month.
It added that the full effect of the policy as relates to prices can, therefore, not be reflected in June only, but also in subsequent months, based on actual prices collected in market outlets across the country.