Nigeria’s inflation rate has surged to a 28-year high, marking a significant economic challenge for the country. The National Bureau of Statistics (NBS) has released alarming figures, showing a substantial increase in both the headline and food inflation rates. Even as analysts speculate on whether inflation has peaked, they say Nigeria needs new robust economic strategies and interventions more urgently than ever.
Headline inflation: A stark increase
The headline inflation rate for June 2024 reached an unprecedented 34.19 per cent, up from 22.79 per cent in June 2023. This year-on-year rise of 11.40 percentage points underscores the severity of the economic situation. On a month-on-month basis, the inflation rate increased by 0.17 percentage points, from 2.14 per cent in May 2024 to 2.31 per cent in June 2024.
The NBS explained, “In June 2024, the headline inflation rate increased to 34.19% relative to the May 2024 headline inflation rate of 33.95%. This indicates an increase of 0.24 percentage points.”
Urban versus rural inflation
The inflation dynamics in urban and rural areas show a varied picture. Urban inflation, on a year-on-year basis, was 36.55 per cent in June 2024, while the month-on-month urban inflation rate stood at 2.46 per cent. In contrast, rural inflation was slightly lower. The rural inflation rate for June 2024 was 32.09 per cent year-on-year and 2.17 per cent month-on-month.
In May 2024, rural inflation was recorded at 31.82 per cent year-on-year, a notable increase from 21.19 per cent in May 2023, highlighting the broader economic impact across different regions of the country.
Food inflation: A critical concern
Food inflation has reached a critical level, posing a significant threat to household budgets. The food inflation rate for June 2024 was reported at 40.87 per cent year-on-year, a sharp increase of 15.62 percentage points compared to 25.25 per cent in June 2023. On a month-on-month basis, food inflation rose to 2.55 per cent in June 2024, up from 2.28 per cent in May 2024.
The NBS attributed the rise in food inflation to the increased average prices of essential items such as groundnut oil, palm oil, water yam, cocoyam, cassava, and various fish types like catfish and croaker.
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Has inflation peaked?
Some analysts suggest that Nigeria’s inflation may have reached its peak as the devaluation effects begin to wane. However, the current figures reflect a severe economic strain that requires immediate and effective intervention.
The Nigerian Federal Government (FG) has implemented measures to combat the steep rise in prices. Recently, the FG removed tariffs and other charges on essential commodities like food and medicines to alleviate the growing hunger crisis.
Despite these efforts, Nigeria’s economy continues to struggle. The decline in oil prices, Nigeria’s primary export, coupled with a weak naira, has exacerbated the situation. The global pandemic further strained the economy, pushing inflation to new highs.
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Historical context and future outlook
In March 2021, Nigeria’s inflation rate was already high at over 18 per cent, with food prices up by 22.9 per cent. The current inflation figures reflect a continuing upward trend, with June 2024’s rates being the highest in nearly three decades.
The NBS’s Consumer Price Index (CPI) highlights the average change in prices of goods and services consumed daily. The CPI data for June 2024 paints a bleak picture of the economic landscape, with substantial year-on-year and month-on-month increases.
