After about 20 months of upwards movement, Nigeria’s Consumer Price Index (CPI) which measures inflation witnessed a decline to 33.40 per cent, indicating that inflation may be retreating; BENJAMIN UMUTEME writes.
When the National Bureau of Statistics (NBS) released the monthly Consumer Price Index (CPI), analysts expected the rates to rise marginally; however, it was indeed a pleasant surprise to many others that the rates trended downward.
NBS, in the CPI report for July 2024, indicated that Nigeria’s headline inflation rate eased to 33.40 per cent relative to the June 2024 headline inflation rate of 34.19 per cent.
The July 2024 headline inflation rate showed a decrease of 0.8 per cent points when compared to the June 2024 headline inflation rate.
On a year-on-year basis, the headline inflation rate was 9.32 per cent points higher compared to the rate recorded in July 2023, which was 24.08 per cent. This shows that the headline inflation rate (year-on-year basis) increased in July 2024 compared to the same month in the preceding year (i.e., July 2023).
Furthermore, on a month-on-month basis, the headline inflation rate in July 2024 was 2.28 per cent, 0.03 per cent lower than the rate recorded in June 2024 (2.31%). This meant that in July 2024, the rate of increase in the average price level was lower than the rate of increase in the average price level in June 2024.
Urban inflation
On a year-on-year basis, in July 2024, the urban inflation rate was 35.77 per cent, this was 9.94 percentage points higher compared to the 25.83 per cent recorded in July 2023.
On a month-on-month basis, the urban inflation rate was 2.46 per cent in July 2024, this was 0.003 per cent points lower compared to June 2024 (2.46%).
The corresponding 12-month average for the urban inflation rate was 32.89 per cent in July 2024. This was 10.02 per cent points higher compared to the 22.87 per cent reported in July 2023.
Rural inflation
The rural Inflation rate in July 2024 was 31.26 per cent on a year-on-year basis; this was 8.77 per cent higher compared to the 22.49 per cent recorded in July 2023.
On a month-on-month basis, the Rural inflation rate in July 2024 was 2.10 per cent, down by 0.07 percentage points compared to June 2024 (2.17%).
The corresponding twelve-month average for the rural inflation rate in July 2024 was 28.86 per cent. This was 7.82 per cent higher compared to the 21.04 per cent recorded in July 2023.
Food inflation
The statistics bureau went further to say that food inflation rate also declined to 39.53 per cent from 40.87 per cent.
Analysts say the decline can be attributed to slower price increases for items including tin milk, baby powdered milk (under the milk, cheese, and egg category), mudfish, fresh fish (obokun), snail (under the fish category), date palm fruit (debenu), watermelon, garri, and akpu (fufu) (under the bread and cereals category).
“The food inflation rate in July 2024 was 39.53 per cent on a year-on-year basis, 12.55 per cent points higher compared to the rate recorded in July 2023 (26.98%). The rise in food inflation on a year-on-year basis was caused by increases in prices of food items,” the agency stated.
“On a month-on-month basis, the food inflation rate in July 2024 was 2.47 per cent which shows a 0.08 per cent decrease compared to the rate recorded in June 2024 (2.55%). The fall can be attributed to the decline in the rate of increase in the average prices of tin milk, baby powdered milk, etc.
“The average annual rate of food inflation for the 12 months ending June 2024 over the previous 12-month average was 36.36 per cent, an 11.90 percentage points increase from the average annual rate of change recorded in July 2023 (24.46%).”
A further breakdown of food inflation by states showed that on a Year-on-Year basis, food inflation was highest in Sokoto (46.26%), Jigawa (46.05%), Enugu (44.06%) while Adamawa (33.48%), Bauchi (35.10%) and Benue (36.41%), recorded the slowest rise in Food inflation on Year-on-Year basis.
On a Month-on-Month basis, however, July 2024 Food inflation was highest in Borno (5.07%), Sokoto (4.99%), and Enugu (4.17%), while Kwara (0.51%), Taraba (0.56%) and Ondo (0.68%) recorded the slowest rise in Food inflation on Month-on-Month basis.
It’s long expected
Senior Portfolio Manager with Afrinvest West Africa, Babatunde Atolagbe, said the inflation easing was due to ongoing reforms in different sectors of the economy.
Atolagbe said “the moderation has been long anticipated.”
For Professor of the Capital Market at the Nasarawa State University, Uche Uwaleke, the primary driver of the moderation in inflationary figures was due to food prices moderation.
According to Uwaleke, “the easing in the headline inflation rate is due chiefly to the moderation in food inflation occasioned by the harvest season.
“The drought reported in many parts of the North partly explains the high rate of food inflation in states like Sokoto (46.26%) and Jigawa (46.05%).
“Also note that the rural inflation rate increased in the month of July.
“What all these point to is that it is time for the CBN to recognise the real pressure points and shift some attention to how the fiscal authorities can be supported to boost food production beginning with a halt in MPR hike next month,” he declared.
FG not resting on oars
Impressednwith the development, the federal government says that despite inflation easing, it was not resting on its oars.
Minister of State for Agriculture, Aliyu Abdullahi, disclosed that the prices of commodities in the market will drop significantly as imported food finds its way into the market.
“You will see a lot of programmes trying to dampen. reduce prices, the situation,” the minister added
Tackling price hikes by businesses
In a bid to further force down food prices, the Federal Competition & Consumer Protection Commission says it would not stand and watch business owners across the country engaging in unethical price hikes of goods and services.
The commission warned business owners engaged in the practice to either stop or be prepared to face the wrath of the law.
According to the FCCPC, any person or group of persons or organisation that goes ahead with price fixing or gouging will be arrested and prosecuted by the commission.
The FCCPC Executive Vice Chairman, Tunji Bello, gave the warning in a keynote address to a one day stakeholders’ engagement on exploitative pricing held in Abuja.
Bello emphasized that in view of the current situation in Nigeria, price gouging and fixing are not only unethical but patently illegal under the FCCPA.
“Section 17 of the Act empowers the commission to eliminate anti- competitive practices, misleading, unfair , deceptive or unconscionable marketing , trading and business practices,” he said.
“As such, the FCCPC has the will and the capacity to invoke the full weight of the law against those found culpable of exploiting consumers for undue profit, under Section 155, violators, whether individuals or corporate entities, will face severe penalties, including substantial fines and imprisonment if caught by the courts, this is intended to deter all parties involved in such illicit activities,”
He further stated that the stakeholder’s engagement approach is born out of the commission’s conviction that dialogue and collaboration are equally important tools in fostering a fair market place.
According to the vice chairman, “One purpose of the meeting is to engage with all invited stakeholders such as the markets, leaders and key players in the supply and distribution chains to chart a path forward that balances the need for business profitability with the imperative of consumer protection.”
He gave the assurance that the commission believes that through constructive engagements, all concerned can establish a framework for reasonable pricing that benefits all, particularly, the consumers who are the backbone of the nation.
Expectations are that as the prices of commodities fall due to the harvest, the pressure on many families will further reduce.