Nigeria’s inflation eases slightly as seasonal harvest cools rising prices in July

• Down 33.40% from 34.19% in June

Onome Amuge

After months of battling high inflation, Nigeria’s economy recorded a cooling in July 2024 as the country’s inflation rate dropped to 33.40 percent, the lowest level in over a year. 

The 1.79 percentage point decrease from June’s inflation rate was primarily due to a moderation in food inflation, as explained by Uche Uwaleke, professor of capital market and finance, and director of the Institute of Capital Market Studies at Nasarawa State University.

Uwaleke, in his assessment of the recently released Consumer Price Index and Inflation  report by the National Bureau of Statistics (NBS), observed that there were variations in inflation rates across Nigeria. 

He pointed out that the highest inflation rate was recorded in Bauchi state, reaching an 46.04 percent in July 2024, significantly higher than the 42.95 percent recorded in June 2024. At the opposite end, the lowest inflation rate was registered in Benue state at 27.28 percent, highlighting the diverse economic realities across the country.

Uwaleke’s analysis also uncovered that the high food inflation rates in Sokoto (46.26%) and Jigawa (46.05%) could be partially explained by the drought experienced in many parts of Northern Nigeria, which has negatively impacted food production in these regions. 

Furthermore, he noted that inflation rates in rural areas have increased in July 2024, indicating that the challenges associated with high inflation are also affecting rural areas.

“What all these point to is that it is time for the CBN to recognize the real pressure points and shift some attention to how the fiscal authorities can be supported to boost food production beginning with a halt in MPR hike next month,” the professor of capital market and finance suggested. 

The NBS report highlighted a significant increase in the twelve-month inflation rate compared to the previous year. The percentage change in the average CPI for the twelve months ending July 2024 stood at 30.76 percent, an 8.84 percent increase from the 21.92 percent recorded in the same period a year earlier. This higher twelve-month inflation rate indicated that, despite the recent decrease in inflation, prices have still increased considerably over the last year.

The report also showed  an increase in the twelve-month inflation rate compared to the previous year. The percentage change in the average CPI for the twelve months ending July 2024 stood at 30.76 percent, an 8.84 percent increase from the 21.92 percent recorded in the same period a year earlier. This higher twelve-month inflation rate indicated that, despite the recent decrease in inflation, prices have still increased considerably over the last year.

Concerning food inflation during the period under review, the NBS revealed that food inflation in July 2024 was 12.55 percentage points higher than the same period last year at a 39.53 percent year-on-year inflation rate. This implies that food prices have risen significantly over the last twelve months.

The rise in Food inflation on a year-on-year basis was attributed to increases in prices of semovita, yam flour (prepacked), wheat flour (prepacked), etc (bread and cereals class), yam, Irish potatoes, water yam, etc (potatoes, yam & other tubers class), groundnut oil, palm oil, etc (Oil & Fats Class) and Milo, Bournvita, Ovaltine (Coffee, Tea & Cocoa Class), etc. 

On a month-on-month basis, the food inflation rate in July 2024 stood at 2.47 percent, a 0.08 percent decrease compared to the 2.55 percent rate recorded in June 2024. The report attributed the month-on-month fall in food inflation to the decline in the rate of increase in the average prices of tin milk, baby powdered milk, etc (Under Milk, Cheese & 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 & Stationeries Class) and Turkey meat, Minced Pork, etc (Under Meat Class). 

Meanwhile, the average annual rate of food inflation for the twelve months ending June 2024 over the previous twelve-month average was 36.36 percent, an 11.90 percent point increase from the average annual rate of 24.46 percent change recorded in July 2023.

The NBS report revealed that the Urban inflation rate for July 2024 was significantly higher than the same period last year, with the corresponding twelve-month average Urban inflation rate reaching 32.89 percent in July 2024, representing an increase of 10.02 percentage points compared to the 22.87 percent reported in July 2023. 

Per rural inflation, the inflation rate in July 2024 was 31.26 percent on a year-on-year basis, marking an 8.77 percent increase from the inflation rate recorded in July 2023 (22.49%). 

The month-on-month inflation rate for rural areas showed a slight decrease of 0.07 percentage points, falling from 2.17 percent in June 2024 to 2.10 percent in July 2024.