In recent months, Nigerians have faced rising prices of essential commodities, particularly foodstuffs, driven by a mix of government policies and other economic factors. However, despite these challenges, Nigeria’s inflation rate has shown signs of easing between June and August 2024.
Inflation is the rate at which the general price level of goods and services in an economy increases over a period of time, eroding the purchasing power of money. It is typically measured using a basket of selected goods and services, with the inflation rate reflecting how much prices have risen month-by-month or year-on-year. On the flip side, deflation refers to a sustained decrease in prices over time.
According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate decelerated from 34.19% in June to 32.15% in August. This gradual slowdown represents a welcome relief for consumers struggling with rising costs, though the rate remains significantly higher compared to the previous year.
In June, Nigeria’s headline inflation rate stood at 34.19%, an increase from 33.95% in May. This marked a rise of 0.24% points, indicating that inflation was still accelerating.
On a year-on-year basis, inflation was 11.40% higher compared to June 2023, which recorded a rate of 22.79%.
Month-on-month, the inflation rate was 2.31%, higher than May’s 2.14%, signaling that the average price level was still rising at a faster pace
In July, the headline inflation rate eased slightly to 33.40%, a decrease of 0.8% points from June’s 34.19%. This indicated a slowdown in the upward movement of prices.
Year-on-year, inflation in July 2024 was 9.32% higher than in July 2023, when the inflation rate was 24.08%.
On a month-on-month basis, the inflation rate was 2.28%, lower than June’s 2.31%. This means that while prices were still rising, they were doing so at a slower rate than the previous month.
By August, the inflation rate had further eased to 32.15%, representing a decrease of 1.25% points from July’s 33.40%. This marked a significant improvement in the inflation trajectory.
Year-on-year, inflation in August 2024 was 6.35% higher than in August 2023, which had an inflation rate of 25.80%.
Month-on-month, the inflation rate was 2.22%, slightly lower than July’s 2.28%. This indicates that the rate of price increases was slowing down, offering some relief to consumers.
While the overall inflation rate eased, food inflation remained a major concern. In August 2024, food inflation was recorded at 37.52%, a stark reminder of the persistent pressure on household budgets, as food prices continue to soar due to various factors, including supply chain disruptions and currency depreciation.
A high inflation rate, especially one that affects essential commodities like food, is a cause for concern. It erodes the purchasing power of the currency, making it harder for people to afford basic necessities. The slowdown in inflation from June to August is a positive sign, but the overall rate remains elevated, which means affordability remains a challenge for many Nigerians.
The inflation rate is also a key indicator of economic stability. High inflation can signal deeper structural issues in the economy, such as weak monetary policy, fiscal instability, or external shocks. Nigeria's ability to maintain this downward trend will be crucial for economic growth and financial stability in the coming months.
While the deceleration of inflation from June to August 2024 offers some hope, the high cost of living remains a pressing concern for many Nigerians. The slight ease in the inflation rate, especially on a month-by-month basis, suggests that government policies and interventions are starting to have an impact, but more work is needed to bring inflation down to manageable levels.
The Nigerian government, along with the Central Bank and other economic stakeholders, will need to continue implementing strategies aimed at controlling inflation, supporting food production, and stabilizing the currency to ensure that the gains made in these months are sustained.