UPDATED: Nigeria’s inflation hits 25.80% as food prices rise

Nigeria’s annual inflation rate rose to 25.80 per cent in August from 24.08 per cent in the previous month, the National Bureau of Statistics (NBS) said Friday.

The statistics office said the August headline inflation rate shows an increase of 1.72 per cent points when compared to the July headline inflation rate.

The NBS said on a year-on-year basis, the headline inflation rate was 5.27 per cent points higher compared to the rate recorded in August 2022, which was 20.52 per cent.

“This shows that the headline inflation rate (year-on-year basis) increased in August 2023 when compared to the same month in the preceding year (i.e., August 2022),” it said.

According to the report, the food inflation rate in August quickened to 29.34 per cent on a year-on-year basis, which was 6.22 per cent points higher compared to the rate recorded in August (23.12 per cent ).

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Food prices have been on the rise across Nigeria in recent years. The situation deteriorated due to the impact of government policies such as the removal of subsidy on petrol, among others.

President Bola Tinubu on 29 May during his inauguration, announced the removal of subsidy on petrol. This development has caused hardship for many Nigerians with its attendant increase in the prices of goods and services.

Apart from the removal of subsidy, the Central Bank of Nigeria (CBN) also announced the unification of all segments of the forex exchange (FX) market as part of efforts to engender transparency in the markets and boost investors’ confidence.

The policy has been widely applauded as well-intentioned and necessary; it has put additional pressure on the local currency and manufacturers, with ripple effects on prices.

Inflation has remained high in Africa’s largest economy, prompting the apex bank to hike interest rates to their highest levels in nearly two decades.

In July, the Central Bank of Nigeria (CBN), raised its benchmark lending rate to 18.75 per cent.

The bank said, “hiking the interest rate has made a lot of difference in moderating the rate of inflation”.

It noted that the option to continue the hike in the policy rate, albeit moderately, also presented a strong alternative premised on the expected liquidity injections into the economy from the recent efforts to unify the nation’s foreign exchange markets.

In July, Mr Tinubu declared an immediate State of Emergency on food insecurity to tackle the increase in food prices.

He also directed that “all matters pertaining to food & water availability and affordability, as essential livelihood items, be included within the purview of the National Security Council.”

Report

In its inflation report Friday, the NBS said the contributions of items on the divisional level to the acceleration in the headline index are food & non-alcoholic beverages (13.36 per cent), housing water, electricity, gas & other fuel (4.32 per cent), clothing & footwear (1.97 per cent), and transport (1.68 per cent),.

Others are furnishings & household equipment & maintenance (1.30 per cent), education (1.02 per cent), health (0.78 per cent), miscellaneous goods & services (0.43 per cent), restaurant & hotels (0.31 per cent), alcoholic beverage, tobacco & kola (0.28 per cent), recreation & culture (0.18 per cent) and communication (0.18 per cent).

On a month-on-month basis, the report said the headline inflation rate in August was 3.18 per cent, which was 0.29 per cent points higher than the rate recorded in July 2023 (2.89 per cent).

“This means that in August 2023, on average, the general price level was 0.29 per cent higher relative to July 2023.

“The percentage change in the average CPI for the twelve months ending August 2023 over the average of the CPI for the previous twelve-month period was 22.38 per cent, showing a 5.31 per cent increase compared to 17.07 per cent recorded in August 2022,” the report said.

Food Inflation

The Food inflation rate in August was 29.34 per cent on a year-on-year basis, which was 6.22 per cent points higher compared to the rate recorded in August 2022 (23.12 per cent).

The bureau said the rise in food inflation on a year-on-year basis was caused by increases in prices of oil and fat, bread and cereals, fish, fruit, meat, vegetables and potatoes, yam and other tubers, vegetable, milk, cheese and eggs.

“On a month-on-month basis, the Food inflation rate in August 2023 was 3.87 per cent, this was 0.41 per cent points higher compared to the rate recorded in July 2023 (3.45 per cent),” it said.

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According to the bureau, the rise in food inflation on a month-on-month basis was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, fish, oil and fat, coffee, tea, and cocoa.

“The average annual rate of Food inflation for the twelve months ending August 2023 over the previous twelve-month average was 25.01 per cent, which was a 5.99 per cent points increase from the average annual rate of change recorded in August 2022 (19.02 per cent),” it said.