Nigeria’s inflation rate nine months after new government since 1999

Nigeria’s headline inflation under the President Bola Tinubu’s led administration has spiralled to 31.70 percent in February, the highest after nine months of inaugurating successive governments since 1999, a BusinessDay’s findings show.

As of May 2023, when the Tinubu government took over the helm of affairs, data from National Bureau of Statistics show that the country’s consumer price stood at 22.41 percent, and has since been on a streak for nine consecutive months, hitting a record.

The president hit the ground running right from the day he was sworn in, removing the long standing petrol subsidy and later unifying the forex market, allowing the naira to float, with its value determined by market forces.

These hurriedly taken reforms, though needed to put the country on the right pedestal, were not well thought out as opined by many experts. Its ripple effects have seen prices of goods and services surge with the naira plummets both at the official window and on the street.

According to BusinessDay checks using data from the country’s bureau of statistics, at the inauguration of the President Olusegun Obasanjo’s administration, Africa’s largest economy had 11.36 percent as its inflation rate but fell to -1.76 percent nine months after.

Also, when the late President Musa Yar’adua took over government in May 2007, Nigeria had a single digit consumer price index at a low of 4.64 percent but saw an increase, peaking at 8.04 percent in March 2008.

Upon the death of Yar’adua, President Goodluck Jonathan finished his term and was later sworn in as the president in May 2010. As at this period, Nigeria’s headline inflation had accelerated to 15.04 percent, but saw a decline nine months after, dropping at 12.08 percent.

President Muhammadu Buhari’s government at inauguration had a single digit inflation rate of 9.00 percent, but jumped to 11.38 percent in nine months, leaving the cost of buying goods and services at 22.41 which the Tinubu-led administration inherited.

Rising food prices pushed Nigeria’s inflation to over 20-year high in February, the country’s statistics agency said on Friday.

The Consumer Price Index report released by the NBS showed that prices rose by 1.80 percent to 31.70 percent in February 2024, compared with 29.90 percent in January.

Inflation, the rate at which the general level of prices for goods and services rises, has seen purchasing power of the naira dwindle. When inflation occurs, each unit of currency buys fewer goods and services than it did before.

“Nigeria’s headline inflation will accelerate till around Q2 until the number starts going down through further monetary tightening by the CBN,” a source familiar with the matter said.

“Naira is already converging and strengthening against the US dollars both at the official and parallel market, so you can expect a fall in inflation, though not significant, by mid of the year,” he added.

According to Olayemi Cardoso, Nigeria’s CBN governor, factors influencing rising inflation are exchange rate passthrough, rising cost of energy, high fiscal deficit and lingering security challenges in high food-producing areas. Also, domestic inflation keeps mounting due to the global economic crisis about trade disruptions in geo-political risk areas.

Meanwhile, even as Nigerians grapple with the effects of rising cost of living occasioned by the record high inflation, the CBN has projected “an upward trajectory in the near-term before commencing a descent”.

Similarly, Coronation, in its economic flash note for February projected that the country’s inflation may reach a peak in Q2 before witnessing a decline.

“Our analysis indicates that inflation is likely to reach a peak in the Q2 before gradually receding, all things being equal,” analysts at Coronation said.

However, with the recent jumbo hike in the interest rate to 22.75 percent by the Olayemi Cardoso-led Monetary Policy Committee (MPC), experts have said the move, aimed at curbing inflation, will stabilise the economy.

Kelvin Emmanuel, an economist, said in an earlier interview that inflation can be controlled if the government reduces the amount of money in circulation or increases its production output.

“The market is controlled by demand and supply and the best way to manage inflation is to either reduce money supply or increase production output. A price control system and a free market economy are like oil and water—they never mix,” he said.