Breaking News: Nigeria’s raging inflation has began slowing down starting from the month of July 2024. There has been a general slide in the prices of commodities especially food items which is the worst hit by the inflationary spikes.
9AM News Nigeria learnt that this recent trend is attributed to the recent policy by the Federal Government of Nigeria waiving import-duties on imported food items for a period of 150 days. This policy was necessitated by the Nigerian government to quell the pains of food shortage and hunger amidst yearnings and agitations from the masses. The Naira has also gained stability in recent times.
Financial Analysis
This information was revealed in the July Inflation Report released last week by the Nigerian Bureau of Statistics (NBS).
Tobi Ehinmosan a financial analyst said in a statement made available to 9AM News Nigeria “This high year-on-year inflation index from last year will impact this year’s figure, so there is an expectation to see a deceleration in July’s numbers. However, for the month-on-month, inflation may keep rising because price pressure is still dominant in the economy, including security and distribution challenges of agricultural products, high petrol prices, high transportation costs, and the exchange rate depreciated in July”.
He said the 150 day duty-free policy the government will have a positive effect on the prices of food items.
He added “We have also witnessed stability of the Naira in recent days. If this persists, it could also help fight inflation,”.
Nigeria has been grappling with its worst food inflation in recent history which has thrown many families into a dire situation of food insecurity, with food inflation rising to 40.88% during the month of June 2024.
Thankfully in recent days the prices of items like potatoes, garri, yam, beans, rice, tomatoes and pepper have crashed in various markets across the country offering some relief to low income households.
A survey carried out by Ogasabi of 9AM News Nigeria showed that a basket of tomatoes for instance which sold at N120,000 in June this year currently sells for N50,000. A basket of pepper which previously sold for N35,000 now sells for N12,000. A plastic bowl of potatoes which sold for N12,000 now sells for N4000 and the same of quantity of garri which sold for N4000 now sells for N3,500.
Yemisi Adebayo, a research analyst at Coronation Merchant Bank, speaking on the issue said inflation will begin to slow down as expected but the effect may be slight for now but is expected to accelerate over time.
CBN Intervention
Yemisi Adeboya further said that the CBN governor Yemi Cardoso is working relentlessly in his bid to intervene in the markets to curb food inflation.
“The President gave an order for the 150-day free import duty, which will encourage imports. We have been seeing some relative appreciation in the exchange rate. If the momentum is maintained, then it will translate to reduced prices. Food inflation, which is the key driver of inflation, will moderate and we will see the impact on headline inflation. Inflation has maintained a downward trend month-on-month since February but it was interrupted in June by the Muslim festive period that occurred that month.
“In June, petrol prices were high, which pushed up inflation because demand was high” She said.
A Cardinalstone analyst speaking on the issue said “The government’s plan to import 250,000 metric tons (MT) of wheat and 250,000 MT of maize will also bode well for the food price outlook, providing a positive counterbalance to the inflationary risks,”. Overall, we expect headline inflation to moderate by 50 basis points to 33.7 percent,”.
Financial Analysis
Another financial analyst from Financial Derivatives Company (FDC) said in their economic bulletin published on August 9 2024, “Our recent market survey reveals a further build-up in inflationary pressures by 0.07 percent to 34.26 percent as supply chain disruptions continue to take their toll on prices.
“The foreign exchange uncertainty and the supply bottlenecks together with an increase in the price of petrol (PMS) are culminating in a further rise in headline inflation. Food inflation is likely to inch up further to 40.98 percent despite the harvest season,”.
“Core inflation is expected to move in the same direction as food inflation to 27.48 percent. The rise is supported by exchange volatility between N1304/$ and N1670/$ in July,”.
