Nigeria’s consumer price index (CPI), which measures the rate of change in prices of goods and services otherwise called the inflation rate, rose to 24.08% in July 2023 — up from 22.79 per cent in the previous month. This is according to the National Bureau of Statistics (NBS) report released on Tuesday.
The latest 1.29% spike is the seventh consecutive rise in the country’s inflation rate this year and the highest in eighteen years. Nigeria’s inflation rate last reached the 24% mark in September 2005, when the rate was 24.3%.
“Looking at the movement, the July 2023 headline inflation rate showed an increase of 1.29 per cent points when compared to June 2023 headline inflation rate,” the NBS report disclosed
“On a year-on-year basis, the headline inflation rate was 4.44% points higher compared to the rate recorded in July 2022, which was 19.64%. This shows that the headline inflation rate (year-on-year basis) increased in July 2023 when compared to the same month in the preceding year (i.e., July 2022).”NBS
On a month-on-month basis, NBS said the headline inflation rate in July 2023 was 2.89% — 0.76% higher than the rate recorded in June (2.13%). This means that in July 2023, on average, the general price level was 0.76% higher relative to June 2023.
“The percentage change in the average CPI for the twelve-month period ending July 2023, over the average of the CPI for the previous twelve-month period, was 21.92%; showing a 5.17% increase compared to 16.75% recorded in July 2022,” the report said.
A higher inflation rate is most obvious when considering the price of food items. The report also said the food inflation rate in July 2023 hit 26.98% on a year-on-year basis. This was 4.97% higher than the rate recorded in the same month last year. According to the NBS, the rise in the food index is caused by increases in prices of oil and fat, bread and cereals, fish, potatoes, yam and other tubers, fruits, meat, vegetable, milk, cheese, and eggs.
Nigeria’s plan to curb rising inflation
President Bola Ahmed Tinubu’s few months in office have ushered into Nigerian society some of the boldest reform agendas recorded in the country’s illustrious history. Some of these eye-raising policies include the removal of the petrol subsidy and new regulations for foreign exchange trading.
As the inflation rate in the country continues to rise, the President Tinubu-led administration has made some efforts to slow down the rise. However, this may involve reversing or slowing down the implementation of the policies he has proposed and raise questions about their feasibility in the first place.
.On July 25, 2023, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR), which measures interest rate, from 18.5% to 18.75%. The apex bank said, “Hiking the interest rate has made a lot of difference in moderating the rate of inflation”.
No more increase in Petrol prices
Bloomberg reports that Nigeria will suspend raising petrol prices even amid the rising price of crude globally as the country aims to slow the rising inflation rate.
“Mr. President is convinced based on information before him that we can maintain current pricing without reversing our deregulation policy,” said Ajuri Ngelale, spokesman for the president. That will happen “by swiftly cleaning up existing inefficiencies within the midstream and downstream petroleum sector,” he said, without giving further details.
Given the suffering of average citizens under the prevailing suffocating circumstances, sweeping comments without specific and tangible courses of action would hardly do much in boosting the morale of the people. It certainly would not inspire any confidence, especially for a government that wasn’t popular from day one.
Addressing the Forex shortage
To address the forex shortage in the country with a dollar exchanging at over N900 to the naira, Acting CBN Governor Folashodun Shonubi, on Monday, met with President Tinubu and told journalists that the apex bank would take specific steps in the next few days to improve the liquidity in the market.
Sonubi said Tinubu was worried about the consistent fall of the naira against the dollar. Hence efforts would be made to curb the situation. “Mr. President is very concerned about some of the goings on in the foreign exchange market,” he said.
The acting CBN governor said economic factors do not solely drive the fluctuations in the parallel market but also speculative demand. He warned speculators that the CBN’s upcoming initiatives could potentially lead to significant losses for them. He also said the measures, when implemented, would yield positive outcomes within a few days.
He said one of the things discussed was what could be done to stabilise and what could be done to improve the liquidity in the market and also the goings on in the various other markets, including the parallel market.
“He’s concerned about its impact on the average person since many activities that we do, which are purely local, are still referenced to exchange rates in the parallel market.
“We have discussed, and I have shared with him what we’re doing to improve supply. If you look at the official market, you will find that that market has been fairly stable, and the spreads of the difference have not fluctuated as much.
While Nigerians wait for the implementation and impacts of these measures, it remains to be seen how soon the average man and MSMEs can begin to reap the fruits
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!