By Chinasaokwu Helen okoro
Nigeria’s headline inflation rate decreased to 33.40 per cent in July 2024, down from 34.19 per cent in June 2024.Food inflation rate also declined to 39.53 per cent from 40.87 per cent, data released on Thursday by the National Bureau of Statistics showed.
The drop in headline inflation marks the first decline since December 2022, when it last dropped to 21.34 per cent.The latest inflation rate figures are based on the NBS Consumer Price Index report for July 2024.
The CPI measures the average change over time in the prices of goods and services consumed by people for day-to-day living.
Headline inflation surged from 29.90 per cent in January to 34.19 per cent in June, representing an increase of 16.72 per cent.
According to the report, the headline inflation rate decreased by 0.79 percentage points in July 2024 compared to June 2024.On a year-on-year basis, the rate was 9.32 percentage points higher than in July 2023, when it stood at 24.08 per cent.This indicates an increase in the headline inflation rate on a year-on-year basis for July 2024 compared to the same month in the previous year.
On a month-on-month basis, the headline inflation rate in July 2024 was 2.28 per cent, slightly lower than the 2.31 per cent recorded in June 2024.The report read, “In July 2024, the headline inflation rate eased to 33.40 per cent relative to the June 2024 headline inflation rate of 34.19 per cent.
Looking at the movement, the July 2024 headline inflation rate showed a decrease of 0.8 per cent points when compared to the June 2024 headline inflation rate.“On a year-on-year basis, the headline inflation rate was 9.32 per cent points higher compared to the rate recorded in July 2023, which was 24.08 per cent. This shows that the headline inflation rate (year-on-year basis) increased in July 2024 compared to the same month in the preceding year (i.e., July 2023).
”Food and non-alcoholic beverages contributed 17.30 per cent to the year-on-year inflation, followed by housing, water, and electricity, gas & other fuel at 5.59 per cent.Core inflation, which excludes the prices of volatile agricultural products and energy, reached 27.47 per cent in July 2024 on a year-on-year basis, marking an increase of 6.99 percentage points compared to the 20.47 per cent recorded in July 2023.
“Furthermore, on a month-on-month basis, the headline inflation rate in July 2024 was 2.28 per cent, which was 0.03 per cent lower than the rate recorded in June 2024 (2.31 per cent). This means that in July 2024, the rate of increase in the average price level was lower than the rate of increase in the average price level in June 2024,” NBS stated.
It was reported that this figure aligns with the projections from economic watchers that the country’s inflation would decelerate in July compared to June when it stood at 34.19 per cent.
Experts are also of the view that slight depreciation is a result of a high base effect and lower food prices, giving relief to the Central Bank of Nigeria on further hikes.Projecting a slowdown, a Senior Financial Market Analyst with FXTM, Lukman Otunuga, said, “One of the key themes in Nigeria in 2024 has been runaway inflation, which jumped to 34.19 per cent in June – its highest level since 1996.
However, the incoming CPI print is expected to show prices slowing in July, cooling to 33.95 per cent compared to 34.19 per cent in the previous month.”“Given the CBN’s aggressive approach towards raising rates, signs of cooling price pressures will be a breath of fresh air for consumers.
”Afrinvest, in its macroeconomic update, also projected a decline in the inflation figure on the back of lower food prices.Confirming this, the NBS also stated that the food inflation rate declined to 39.53 per cent from 40.87 per cent.
On a year-on-year basis, it was an increase of 12.55 percentage points compared to the 26.98 per cent recorded in July 2023. This rise in food inflation was driven by higher prices for items such as semolina, yam flour (prepacked), and wheat flour (prepacked).On a month-on-month basis, the food inflation rate in July 2024 was 2.47 per cent, which represents a 0.08 percentage point decrease from the 2.55 per cent recorded in June 2024.
This decline can be attributed to slower price increases for items including tin milk, baby powdered milk (under the milk, cheese, and egg category), mudfish, fresh fish (obokun), snail (under the fish category), date palm fruit (debenu), watermelon, garri, and akpu (fufu) (under the bread and cereals category) etc.
“The food inflation rate in July 2024 was 39.53 per cent on a year-on-year basis, 12.55 per cent points higher compared to the rate recorded in July 2023 (26.98 per cent). The rise in food inflation on a year-on-year basis was caused by increases in prices of food items,” the agency stated.It added, “On a month-on-month basis, the food inflation rate in July 2024 was 2.47 per cent which shows a 0.08 per cent decrease compared to the rate recorded in June 2024 (2.55 per cent).
The fall can be attributed to the decline in the rate of increase in the average prices of tin milk, baby powdered milk, etc.“The average annual rate of food inflation for the 12 months ending June 2024 over the previous 12-month average was 36.36 per cent, an 11.90 per cent points increase from the average annual rate of change recorded in July 2023 (24.46 per cent).
”In analysing price movements, Food inflation on a year-on-year basis was highest in Sokoto (46.26 per cent), Jigawa (46.05 per cent), Enugu (44.06 per cent) while Adamawa (33.48 per cent), Bauchi (35.10 per cent) and Benue (36.41 per cent), recorded the slowest rise in food inflation on year-on-year basis.On a month-on-month basis, however, July 2024 food inflation was highest in Borno (5.07 per cent), Sokoto (4.99 per cent), and Enugu (4.17 per cent), while Kwara (0.51 per cent), Taraba (0.56 per cent) and Ondo (0.68 per cent) recorded the slowest rise in food inflation on month-on-month basis.
Commenting, a Professor of Finance and Capital Market at the Nasarawa State University, Keffi, Uche Uwaleke, said the ease in headline rate is due to moderation in food inflation occasioned by the harvest season.“The easing in the headline inflation rate is due chiefly to the moderation in food inflation occasioned by the harvest season.
The drought reported in many parts of the North partly explains the high rate of food inflation in states like Sokoto (46.26 per cent ) and Jigawa (46.05 per cent). Also, note that the rural inflation rate increased in July,” he said.
He added that the decline should be supported by a halt in the Monetary Policy Rate hike next month by the CBN.“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,” he added.
