Fueled by a 25.3 percent increase in food prices from 24.8 percent a month earlier and a slight uptick in core inflation to 20.3 percent, headline inflation in Nigeria jumped to 22.79 percent in June 2023, rising by 0.38 percent over 22.41 percent in May.
The new peak shows Nigeria’s annual inflation rate climbed to a fresh seven-year high in June, helped by fuel subsidy removal, a weakened currency amidst other policies by the new administration of President Bola Tinubu that has also declared a state of emergency to control the cost of staple foods.
Data published by the National Bureau of Statistics (NBS) shows that on a year-on-year basis, the headline inflation rate was 4.19 percent points higher compared to the rate recorded in June 2022, which was 18.60 percent. This shows that the headline inflation rate (year-on-year basis) increased in June 2023 when compared to the same month in the preceding year (i.e., June 2022).
As usual, the increases in prices of Oil and fat, Bread and cereals, Fish, Potatoes, Yam and other tubers, Fruits, Meat, Vegetable, Milk, Cheese, and Eggs pushed the food inflation rate in June 2023 to 25.25 percent on a year-on-year basis; a 4.65 percent
point higher relative to the rate recorded in June 2022 (20.60%). This quickens the headline inflation to 22.79 percent.
President Tinubu on taking over at the twilight of May introduced some reforms which have impacted the economy, pushing up prices in the country that endured hardship during the immediate past administration of ex-President Muhammadu Buhari who with the Naira redesign policy of the Central Bank of Nigeria (CBN) and the energy crisis, left Nigerians in deep misery between December and May.
The foreign exchange unification and fuel subsidy removal have led to about 40 percent drop in the value of the Naira, leading to high transport and import costs. Also, President Tinubu has reversed the Finance Act which manufacturers have described some of its provisions as inimical.
With the increase in the inflation rate, the Central Bank of Nigeria (CBN) is expected to respond by hiking interest rates again at its next Monetary Policy Committee (MPC) meeting to be presided over by Folasodun Shonubi, the acting governor of the apex bank.
The MPC has lifted rates by 700 basis points since May 2022 to 18.5 percent to contain an inflation rate that’s been at more than double the top end of its 6 percent to 9 percent target range for over a year. It raised rates by 50 basis points at its two previous meetings.
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