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Food Prices Push Nigerian Inflation Higher

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Food inflation, Nigeria's food production

CEM REPORT, ECONOMY | Nigerian Inflation has continued to soar unabated as report released Tuesday by the Nigerian Bureau of Statistics shows that headline Inflation rose to 24.08% in July relative to June headline Inflation rate which was 22.79%. This represent a difference of 1.29% month-on-month.

On a year-on-year basis, July 2023 headline Inflation rose by 4.44% above that of July 2022 which was 19.64%. This rate was driven by Food and Non-Alcoholic Beverages which contributed 12.47% to the YOY increase.

NBS report also state that Urban Inflation rose YoY by 25.83% with a difference of 5.74% point when compared to the 20.09% recorded in July 2022. On a MoM basis, it rose by 0.75% point higher to 3.05% from 2.31% it recorded in June 2023. The corresponding twelve-month average rate was 22.87%, an increase of 5.59% point higher than the 17.29% reported in July 2022.

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In the same vein, Rural Inflation also rose to 22.49% YoY with an increase of 3.26% from 19.22% recorded in July 2022. It recorded a 2.74% increase MoM, up by 0.78% points compared to June rate of 1.96%. The corresponding twelve-month average rate hit 21.04% with an increase of 4.79% from the 16.25% July 2022 rate.

According to the NBS report, Core Inflation stood at 20.47% YoY, up by 4.41% from July 2022 rate of 16.06%. On MoM, it increased by 0.13% point to 2.11% in July 2023 from 1.77% in June 2022. This increase was driven by increase in transport prices: air, road and other transport related prices. This is surely attributed to the market reaction to the removal of subsidy in May 29, 2023.

Recall that in the last report by CEM on Inflation, there was concern about the possibility of experiencing hyperinflation in Nigeria following multiple factors that have continued to interplay. It was a near reality forecast that Inflation was going to rise further in the month of July following the two times jump in petroleum prices.

[READ ALSO] Nigeria May Experience Hyper-Inflation as Prices of Food Drives up Inflation in June

While this report by NBS validates this forecast by CEM, the proposed further rise in fuel prices which is attributed to the rise in exchange rate against the dollar will further raise cost of transportation which will continue to affect cost of production and distribution of food and non-food items. This is expected to continue to push up prices of goods and services.

 

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