Nigeria's annual inflation rises to highest level since 2005

 

Yam sellers arrange yam tubers in stacks for sale at Bodija market in Ibadan, Oyo, Nigeria August 2, 2022. REUTERS/Temilade Adelaja

According to official data released on Monday, the annual inflation rate in Nigeria accelerated in July to its highest level since 2005, driven by increases in the cost of food, fuel, and apparel.

 

Inflation increased for the sixth consecutive month, according to the National Bureau of Statistics (NBS), reaching 19.64% from 18.60% year over year in June.

 

According to NBS figures, the inflation reading for July was the highest since at least the beginning of 2009.

 

It was the most since the 24.32% recorded in September 2005, according to Refinitiv statistics.

 

Since 2016, double-digit inflation has been roiling Africa's largest economy, in part due to the depreciation of the naira.

 

According to official data released on Monday, the annual inflation rate in Nigeria accelerated in July to its highest level since 2005, driven by increases in the cost of food, fuel, and apparel.

 

Inflation increased for the sixth consecutive month, according to the National Bureau of Statistics (NBS), reaching 19.64% from 18.60% year over year in June.

 

According to NBS figures, the inflation reading for July was the highest since at least the beginning of 2009.

 

It was the most since the 24.32% recorded in September 2005, according to Refinitiv statistics.

 

Since 2016, double-digit inflation has been roiling Africa's largest economy, in part due to the depreciation of the naira.

 

Food prices were up 22.02% year on year in July, caused by increases in prices of bread and cereals, potatoes, yam, meat, fish, oil and other items.

 

Core inflation, which excludes prices of farm produce, was up 16.26% from the same period last year, with gas, liquid and solid fuel, transportation by road and air, garments and hire of clothing among contributing factors.

 

Rising inflation and the state of the economy are major issues as the country heads for a national election in February, when voters will choose a new president as incumbent Muhammadu Buhari steps down.

 

The naira currency has been weakening on the parallel market due to a scarcity of foreign currency since July 2021, when the central bank stopped forex sales to retail currency traders to ease pressure on reserves and support the official market.

 

Demand was directed toward the unofficial market, where the currency is freely traded, as a result of the action.

 

The argument made by policymakers is that ongoing inflationary pressures are structural and heavily influenced by imports.

 

In a research report, analysts at Capital Economics stated that although Nigeria's inflation was likely close to its peak, it would continue to be high.

 

At the central bank's upcoming policy meeting in September, they anticipated another increase in interest rates.

 

Source: Reuters