Nigeria recorded its highest monthly inflation rate in seven years in June, after President Bola Tinubu scrapped petrol subsidy and allowed the devaluation of naira.
Prices of goods and services rose 2.1% in June compared to May, the most since May 2016, according to data released by the National Bureau of Statistics on Monday.
Annual inflation accelerated 22.8% from 22.4% in May – the highest in 17 years.
– Why this matters
The removal of fuel subsidy announced by President Tinubu during his inauguration on May 29 sent the price of petrol from below N200 to N537 a litre. The naira has fallen 72% since the Central Bank of Nigeria eased control and allowed the currency to trade more freely. It closed at N803 on Friday.
The new inflation figures offer evidence that Nigerians are struggling with high prices and that things may likely get worse in the coming months. Bank of America predicts Nigeria’s inflation to reach 30% by end of the year.
– Expect higher rates
The new rates put pressure on the central bank to tighten lending rate further to control soaring prices. The bank meets next week to set its benchmark interest rate. That will be the first under Mr Tinubu and the new acting CBN governor, Folashodun Shonubi.
At the last monetary policy meeting in May, the central bank under former governor Godwin Emefiele raised interest rate by 50 basis points (or 0.5 percentage points) to 18.50%.
Last week, President Tinubu declared a state of emergency to control food costs, promising to expand agriculture and monitor prices.
– Learn more
The statistics office said that food and non-alcoholic beverages contributed the most to the all-item inflation. Food inflation was 25.25% from 24.82% in May.
“The rise in food inflation on a year-on-year basis was caused by increases in prices of oil and fat, bread and cereals, fish, potatoes, yam and other tubers, fruits, meat, vegetable, milk, cheese, and eggs,” it said.
Prices rose at the fastest pace in Lagos, Ondo, and Kogi states, and slowest in Borno, Zamfara and Ekiti.
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