Business a.m.
Nigeria’s inflation rate dropped from 33.40 percent in July 2024 to 32.15 percent in August 2024, according to the latest figures from the National Bureau of Statistics (NBS).
This downtrend, analysts believe, can be largely attributed to the moderation of food inflation brought about by the harvest season, and is expected to present a promising outlook for the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), as they weigh the possibility of halting interest rate hikes when they meet next week.
Uche Uwaleke, a professor of capital market and finance, and director of the Institute of Capital Market Studies at Nasarawa State University, believes that the CBN should change its focus to address the core issues at hand, and shift some of its attention towards supporting fiscal authorities in boosting food production.
According to Uwaleke, this could be achieved by the CBN halting interest rate hikes at its next meeting, allowing fiscal authorities to allocate more resources towards improving food production.
“What all these point to is that it is time for the CBN to recognise 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 this month,” he stated.
The latest analysis of inflation rates, released by the NBS showed that Nigeria’s headline inflation rate decreased by 1.25 percentage points from 33.40 percent in July 2024 to 32.15 percent in August 2024.
However, while this marked a decline on a month-to-month basis, when compared on a year-on-year basis, the inflation rate of 32.15 percent in August 2024 was 6.35 percentage points higher than the August 2023 rate of 25.80 percent.
On a month-to-month basis, the inflation rate decreased from 2.28 percent in July 2024 to 2.22 percent in August 2024, indicating that the rate of price increase was slower in August than in the preceding month.
The NBS report also revealed that food inflation rates increased at a faster pace than the general inflation rates in August 2024. The year-on-year food inflation rate stood at 37.52 percent, 8.18 percentage points higher than the corresponding figure of 29.34 percent recorded in August 2023.
The sharp rise in the food inflation rate on a year-on-year basis was attributed to increases in the prices of several food items across different food categories.
Some of the key contributors to this upward trend were bread and cereals (e.g., bread, maize grains, and guinea corn), potatoes, yams, and other tubers (e.g., yam, Irish potatoes, water yam, and cassava tuber), oils and fats (e.g., palm oil and vegetable oil), and coffee, tea, and cocoa (e.g., Ovaltine, Milo, and Lipton).
On a month-to-month basis, the food inflation rate declined marginally from 2.47% in July 2024 to 2.37% in August 2024, due to the decrease in the rate of increase in the prices of several food items.
The fall was largely driven by a moderation in the prices of certain food items such as tobacco, tea, cocoa, coffee, groundnut oil, milk, yam, Irish potatoes, water yam, cassava tuber, palm oil, and vegetable.
The urban inflation rate, which represents the rate of change in the general price level of goods and services in urban centers, rose on a year-on-year basis in August 2024 to 34.58 percent, 6.89 percentage points higher than the 27.69 percent recorded in August 2023.
On a month-to-month basis, however, the urban inflation rate decreased to 2.39 percent in August 2024 from 2.46 percent in July 2024
The rural inflation rate in August 2024 saw an increase compared to its level in August 2023, rising by 5.85 percent on a year-on-year basis to reach 29.95 percent.
However, the month-to-month rural inflation rate decreased from 2.10 percent in July 2024 to 2.06 percent in August 2024.
