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Nigeria’s Inflation Rate Rises To 24.8% Due To Rising Fuel Prices, FX Scarcity

According to the most recent inflation data issued on Tuesday, Nigeria’s annual inflation rate increased for the seventh consecutive month to reach an 18-year high of 24.08 percent in July 2023.

The National Bureau of Statistics (NBS) data released a report which said the inflation rate increased to 24.08 percent in July 2023 from 22.79 percent the month before, while the rate of food inflation accelerated to 26.98 percent in July from 25.25 percent the month before.

The report read, “Looking at the movement, the July 2023 headline inflation rate showed an increase of 1.29 percent points when compared to June 2023 headline inflation rate.”

Analysts had anticipated that the high gasoline costs brought on by the elimination of subsidies and the naira devaluation would cause the inflation rate to increase even more in July.

Analysts at Financial Derivatives Company Limited, which is led by economist Bismarck Rewane, said in a recent economic bulletin, “Apart from the sustained uptick in the general price level, the slope of the inflation curve is becoming steeper (i.e., the rate of change in inflation is increasing). This is an indication that the impact of recent policy changes is becoming more evident.”

They went on to note that in a period of one month, the price of petrol has increased twice, first to N488 per litre and then to N617 per litre. Also, they said that the price of diesel has gone up 5.88% – from N680 per litre to N720 per litre. In addition, the naira touched an all-time low of N893/$ at the parallel market.

Capital Economics analysts said that the loss of fuel subsidies will cause inflation to rise faster than originally predicted. 

They said, “Our view remains unchanged that the removal of the fuel subsidy will add around 4.5 percentage points to headline inflation. The effects of the fall in the naira will have continued to feed through too.”

Ozioma Samuel-Ugwuezi

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