High Food Prices Push Nigeria’s Inflation To 34.19%

Nigeria’s inflation rate surged to 34.19 per cent in June 2024, the highest level in over a year, driven by soaring food prices. This represents a 0.24 percentage point increase from the 33.95 per cent recorded in May 2024.

The rate at which prices of goods and services rise in the country has continued to soar, as latest data by the National Bureau of Statistics (NBS) showed inflation rate for June rose to 34.91 per cent as food inflation spiked further to 40.89 per cent.

This was higher than analysts’ estimate of 34 per cent inflation rate for June as estimates of month-on-month headline inflation rose by 17 basis points to 2.31 per cent compared to the May increase of  2.14 per cent month-on-month).

On a year-on-year basis, the headline inflation rate was 11.40 percentage points higher compared to June 2023, when it stood at 22.79 per cent. The month-on-month inflation rate also rose to 2.31 per cent in June 2024, up from 2.14 per cent in May.

The NBS attributed the spike in inflation to the rising cost of food, transportation, and housing. Food inflation alone reached 40.87 per cent in June, the highest on record.

The June 2024 headline inflation rate showed an increase of 0.24 per cent points when compared to the May 2024 headline inflation rate. On a year-on-year basis, the headline inflation rate was 11.40 per cent points higher compared to the rate recorded in June 2023, which was 22.79 per cent.

This shows that the headline inflation rate (year-on-year basis) increased in the month of June 2024 when compared to the same month in the preceding year (i.e. June 2023). Furthermore, on a month-on-month basis, the headline inflation rate in June 2024 was 2.31 per cent, which was 0.17 per cent higher than the rate recorded in May 2024 (2.14 per cent).

The latest data showed that, in the month of June 2024, the rate of increase in the average price level is higher than the rate of increase in the average price level in May 2024.

Meanwhile, Food inflation increased by 21bps to 40.87 per cent y/y (May: 40.66 per cent y/y).

The rise in Food inflation on a year-on-year basis was caused by increases in prices of the following items: Millet Whole grain, Garri, Guinea corn, etc (Bread and Cereals Class), Yam, Water Yam, Coco Yam (Potatoes, Yam & Other Tubers Class), Groundnut Oil, Palm Oil, etc (Oil & Fats Class) and Catfish Dried, Dried Fish-Sardine, and Mudfish (Fish Class).

On a month-on-month basis, Food inflation increased by 2.55 per cent, relative to the 2.28 per cent m/m recorded in the previous month.

Similarly, the Core inflation increased by 36 bps to 27.40 per cent y/y (May: 27.04 per cent y/y). The highest increases were recorded in prices of the following items: Rents (Actual and Imputed Rentals for Housing Class), Journey by motorcycle, Bus Journey intercity (under Passenger Transport by Road Class), Accommodation Service, Consultation Fee of a medical doctor, Laboratory service, X-ray photography, etc (under Medical Services Class) and pharmaceutical products. Compared to the previous month, the Core index surged by 5bps to 2.06 per cent m/m in June (May: 2.01 per cent m/m).

In response, the Nigerian government recently announced a 150-day duty-free import window for essential food items like maize, wheat, and rice to help stabilise prices. The government also plans to collaborate with states to expand land cultivation nationwide.

However, analysts warn that the persistently high inflation rate could have severe consequences for the economy and consumers. The core inflation rate, which excludes food and energy, climbed to 26.41 per cent in June.

As policymakers grapple with the inflationary pressures, the public eagerly awaits further measures to address the underlying factors driving the cost of living higher.