Nigeria’s Inflation Dips To 19-Month Low

June saw the highest inflation rate in 28 years, but July recorded a 0.8% point drop.

According to the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate eased to 33.40% in July, down from 34.19% in June, marking the lowest rate in 19 months.

Inflation in Nigeria has been a rollercoaster, driven by various factors, including currency devaluation, high energy costs following the removal of fuel subsidies, and disruptions in the supply chain.

A year-on-year comparison highlights this volatility: in July 2023, the headline inflation rate was 24.08%. By July 2024, it had increased by 9.32% points.

Explaining the implications for the average Nigerian and the broader economy, Kolawole Oyebola, a Nigerian analyst, tells FORBES AFRICA: “The slight drop in inflation is a positive sign, but it doesn’t necessarily indicate that we’re out of the woods. The underlying factors that drive inflation — such as food prices and energy costs — remain volatile.”

In July, food inflation stood at 39.53% on a year-on-year basis, 12.55% points higher than in July 2023. The price increases were driven by staples such as semovita, yam flour, and wheat flour, as well as essential oils like groundnut and palm oil. While the month-on-month food inflation rate in July saw a slight dip to 2.47%, down from 2.55% in June, it still indicates that food prices are rising, albeit at a slower pace.

Oyebola adds, “While the decline in the month-on-month food inflation rate might offer some temporary relief, the annual food inflation rate continues to climb. This is particularly concerning because food constitutes a large portion of the average Nigerian’s expenses.”

For many Nigerians, whose monthly cost of living averages N43,200 ($27), rising food prices mean stretching already thin budgets even further. The average annual rate of food inflation for the twelve months ending in June was 36.36%, up from 24.46% the previous year.

The slight dip in inflation in July might suggest that the worst is over, but many analysts, including Oyebola, urge caution. “It’s too early to celebrate,” he says. “The economic conditions that led to high inflation in the first place are still present. Without significant policy changes and economic reforms, we might see inflation rise again in the coming months.”

“The road to recovery will require sustained efforts to stabilize prices, particularly for essential goods like food, which directly impact the daily lives of millions of Nigerians.”