Nigeria’s inflation eases for the first time in 18 months

Nigeria’s annual inflation rate eased in July for the first time in 18 months, a shift after a prolonged period of rising prices that has strained household budgets and pushed millions into poverty.

The National Bureau of Statistics (NBS) reported Thursday that the inflation rate fell to 33.40% in annual terms from 34.19% in June.

It is the first decline in inflation since December 2022, offering some relief to Nigerians who have been grappling with rising costs amidst economic reforms.

Analysts had previously suggested that June’s inflation figure might represent the peak, as the impact of recent currency devaluation starts to diminish. The slight slowdown in July provides a glimmer of hope for the population, who have been heavily burdened by cost-of-living pressures.

Price increases have been largely driven by President Bola Tinubu’s removal of the longstanding fuel subsidy, the devaluation of the naira, and an increase in electricity tariffs. The measures, implemented to spur economic growth and strengthen public finances, have led to a sharp rise in inflation, affecting household incomes. Inflation rose to 28-year high for months.

Food inflation slightly down

The central bank has responded by raising interest rates four times this year in an effort to control inflation.

Following the last rate hike in July, some analysts speculated that it could be the final increase in the current cycle. The Central Bank of Nigeria’s next rate-setting meeting is scheduled for late September.

The NBS report highlighted that food and non-alcoholic beverages remained the largest contributors to inflation in July. Food inflation also saw a slight reduction, easing to 39.53% from 40.87% in June.

The decline in July’s inflation rate will bring little or no tangible relief as the country continues to navigate the economic challenges posed by the reforms, and as millions of citizens struggle to cope with the rising cost of living.