Inflation rate in Nigeria surged to 24.08 percent in July 2023, showing a 129 basis-point increase when compared to 22.79 percent recorded in the previous month.
This was contained in the National Bureau of Statistics’ (NBS) Consumer Price Index (CPI) report for July 2023 released on Tuesday.
The rise in inflation rate for July represents the sixth consecutive increase in the headline index this year and the significant jump is attributed to the complete removal of petrol subsidy and the unification of the official exchange rate.
According to the NBS, on a month-on-month basis, the headline inflation rate stood at 2.89 percent in July which was 0.76 percent higher than the 2.13 percent recorded in June 2023.
Year-on-year, food and non-alcoholic beverages contributed the most at 12.47 percent to the sharp rise in inflation, followed by housing, water, electricity, gas and other fuel at 4.03 percent and 1.84 percent from clothing and footwear.
Food inflation rate recorded a spike, rising to 26.98 percent in July 2023, representing a 1.73 percent increase from 25.25 percent recorded in the previous month and 4.97 percent points higher than the 22.02 percent recorded in the corresponding period of 2022.
Analysts had projected July’s inflation rate to accelerate further due to the high cost of petrol occasioned by the subsidy removal and the unification of the naira exchange rate.
Commenting on the July inflation, the Director, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the surging inflation has had a devastating effect on citizens’ welfare and the health of small businesses.
According to him, with headline inflation accelerating to 24.08 percent in July as against 22.79 in June and food inflation maintaining its upward trajectory, accelerating to 27 percent, Nigerians are yet to see an abatement to the key factors fuelling inflation as the inflationary pressures have intensified.
Dr Yusuf averred that tackling inflation requires urgent government intervention to address the challenges bedevilling the supply side of the economy.
“It is imperative to urgently fix production and productivity constraints, stabilise the exchange rate by ensuring liquidity in the forex market, tackle insecurity, accelerate efforts to ensure domestic refining of petroleum products and fast-tracking tax and fiscal reforms to curb escalating deficit spending,” he stated.
He called on the government “to give producers and citizens some relief. The government should tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists, especially those in the food processing segments of the agriculture value chain.”
The CPPE Director pointed out that some of the factors driving inflation are global, while others are domestic.
These factors, Dr Yusuf said, “include the depreciating exchange rate, spike in energy prices, rising transportation costs, logistics challenges, forex market illiquidity, hike in diesel cost, insecurity in many farming communities and structural bottlenecks impeding productivity. These are largely supply side and policy concerns.”
However, he noted that “the petrol price increase following the fuel subsidy removal and the sharp depreciation in the exchange rate were dominant factors.”
Dr Yusuf stressed that mounting inflationary pressures have the following consequences for the economy: “Weakening of purchasing power of citizens as real incomes are eroded, thus, aggravating poverty incidence.
“Escalating production costs which negatively impacts profitability; erosion of shareholder value in many businesses, weakening of investors’ confidence and declines in manufacturing capacity utilisation as a consequence of weakening sales and erosion of profit margins.”
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