Nigeria’s headline inflation rate for the month of July 2023 has reached an all-time high of 24.08%, according to the latest figures released by the National Bureau of Statistics (NBS). This represents an increase from the 22.79% recorded in June 2023, marking a 1.29% rise. On a year-on-year basis, the inflation rate was 4.44 percentage points higher compared to July 2022, which recorded a rate of 19.64%.
The surge in inflation has raised concerns about its impact on citizens’ welfare and the health of small businesses. The rising inflation has been attributed to various factors, including increases in contributions from food and non-alcoholic beverages, housing, transportation, and other essential goods and services.
Food inflation has also continued to rise, with the food component sub-index increasing by 26.98% on a year-on-year basis in July 2023. This was significantly higher compared to the rate recorded in June 2022 (22.02%). Factors contributing to the rise in food inflation include increases in prices of oil and fat, bread and cereals, fish, potatoes, yam, fruits, meat, vegetables, milk, cheese, and eggs.
Economic experts have highlighted several factors driving the surging inflation, including the depreciating exchange rate, higher energy prices, transportation costs, logistics challenges, forex market illiquidity, and policy concerns. The removal of fuel subsidies and the depreciation of the exchange rate have been particularly significant factors.
Analysts have expressed concerns over the consequences of mounting inflationary pressures, such as weakened purchasing power, increased production costs, erosion of shareholder value, weakened investor confidence, and declines in manufacturing capacity utilization.
Experts have called for urgent government intervention to address supply-side challenges in the economy. They recommend measures such as stabilizing the exchange rate, tackling insecurity, promoting domestic refining of petroleum products, and implementing tax and fiscal reforms.
The Lagos Chamber of Commerce and Industry (LCCI) suggests that the Central Bank of Nigeria (CBN) should consider moderating the key interest rate to support businesses affected by high operating costs. Additionally, structural issues around infrastructure and agriculture should be addressed to control inflation.
While inflationary pressures are easing in other parts of the world, Nigeria continues to face persistent inflation due to various domestic and global factors. The Central Bank of Nigeria’s response to these challenges will be crucial in managing inflation while balancing economic growth.
