Monthly inflation slows amid CBN’s policy tightening

Nigeria’s headline month-on-month inflation rate slowed for a third time in a row in May 2024, the clearest indicator yet that the Central Bank of Nigeria’s monetary policy tightening measures enacted this year are having the intended effect.

Headline inflation decelerated in May to 2.14 percent from a month earlier, slowing from 2.29 percent in April and 3.02 percent in March, according to the National Bureau of Statistics (NBS). The monthly rate has declined from as high as 3.12 percent in February. Reflecting a slowdown in price increases for essential goods, food inflation also fell for a third consecutive month to 2.28 percent in May, from 2.50 percent in April, and as much as 3.79 percent in February, the NBS data show.

The monthly inflation trend underscores conviction from members of the CBN’sMonetary Policy Committee (MPC) that a combination of tighter monetary policy and appropriate coordinated fiscal measures from the Federal Government will prove effective in arresting the sharp increase in the cost of living that has afflicted Nigerians since the aftermath of the Covid epidemic. While year-on-year inflation has continued to inch higher, it is the monthly numbers that are the all-important indicators isolating the impact since the CBN began raising interest rates in February this year.

“Slowly but surely, the inflation tide is turning,” said Muhammad Sani Abdullahi, Deputy Governor, Economic Policy Directorate at the CBN. “While the numbers are not yet uniform for all measures, such as year-on-year across the entire country, we will continue to work diligently with coordinated policy measures to ensure that the worst of the inflationary cycle is behind us in the nearest future.”

Year-on-year inflation slowed in May for 13 Nigerian states, including Abuja, Akwa Ibom, Borno, Cross River, Delta, Katsina, Ondo, Oyo and Rivers. The month-on-month inflation rate decline, which is nationwide, is reflected in a slowing pace of price rises for some food staples.

CBN Governor Olayemi Cardoso has made tackling inflation his paramount mission as the essential path to achieving sustainable economic growth in the mid- to long-term and improving the standard of living for ordinary people.