Nigeria’s latest inflation report which recorded a decline in July 2024 is generating mixed reactions.
This is as Nigerians have decried that the figure does not reflect everyday market realities.
Recall that on Thursday last week, the National Bureau of Statistics consumers price Index and Inflation data for July indicated that the country’s headline and food inflation declined to 33.40 percent and 39.53 percent from 34.14 percent and 40.87 percent, respectively, in June 2024.
This represents a 0.79 percent decline in core inflation compared to the 34.19 percent recorded in June 2024. Like core inflation, Nigeria’s food inflation dropped on a month-on-month basis to 2.47 percent in July from 2.55 percent.
The development sent a shockwave in the economy because this is the first time Nigeria’s inflation has recorded a decline since December 2022 when it stood at 21.34 percent.
The development comes after a series of monetary and fiscal interventions by the government.
Recall that the Central Bank Nigeria in its latest Monetary Policy Committee meeting further raised the interest rate to 26.75 percent to tackle inflation.
Similarly, the government recently began the commencement of zero import duty waiver for staple foods such as husked brown rice, grain, sorghum, millet, maize, wheat and beans as measures to tackle rising food prices.
Meanwhile, according to a market survey by DAILY POST, a 50-kilogram bag of rice (local rice) stood between N78,000 to N85,000, a mudu of beans (white and red), N2,800 and N3,400, garri between N1300 to N1600, Dustin Basket Tomatoes and Pepper, N6000 and N9000, 1kg of frozen chicken, N4,500, Indomie super pack, N12,500, 1 liter red and groundnut oil N1200 and N1800, five big tubers of yam, N10,000 to N16,000.
“Apart from yam prices that came down because this is harvest season, every other food item continued to witness price increase”, a trader in Dutse Market, Mrs. Caroline Usman told DAILY POST.
Reacting to the latest inflation figure, financial experts have explained why there is a disconnect between the National Bureau of Statistics’ inflation data and market realities.
They made this known in different interviews with DAILY POST on Monday.
Speaking exclusively to DAILY POST on Monday, the Executive Director of the Centre for the Promotion of Private Enterprise, Muda Yusuf clarified that a decrease in inflation doesn’t imply a price reduction, rather it means a decrease in the rate of increase.
According to him, the Nigerian government must deal decisively with the instability in the foreign exchange market, energy cost, trade cost and insecurity to bring down inflation.
“First, we need to be clear about the concept of inflation. A decrease in inflation doesn’t imply a price reduction but rather a decrease in the rate of increase.
“For instance, if there is a price increase of N10 in July on a particular product and in July, it is N5, that is a decrease in Inflation.
“Inflation is about measuring the rate of price increase. You talk about price reduction when referring to deflation.
“There is this general misconception among many people that once they hear that there is a decline in inflation, they feel that what the report says is that the price of goods and services has reduced.
“It is the nature of prices to come up while some come down. Inflation is about the general price level.
“There is a big array of products in the inflation basket. Of course, the one that has the most weight is food inflation. To reduce the inflationary pressures we need to examine the key drivers.
“The three major drivers are the exchange rate situation; if we can strengthen the exchange rate, and energy cost, which has driven the cost of production, operation and logistics, prices will come down.
“From the cost-push perspective, energy cost is very important. If we bring down the cost of energy, moderation is possible. We can achieve this if you reduce import dependence on fuel.
“If we can refine it domestically, if the government sells crude to Dangote Refinery and other refineries in Naira, costs will be the driver of inflation.
“Lastly, insecurity; the food crisis has been largely attributed to food insecurity”, he told DAILY POST.
On his part, a financial analyst and the Chief Executive Officer of SD & D Capital Management, Gbolade Idakolo said despite the decline in inflation, Nigeria’s economic environment was still very tense.
He noted that the government should come up with policies that impact the ordinary citizen directly resulting in a reduction in cost-of-living.
“The NBS data showing core and food inflation reducing in July 2024 is partly due to aggressive policies of the government that are gradually taking shape.
“However, seasonal factors affected a decline in food inflation which saw the prices of major food items.
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