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Nigeria’s inflation hits 34.37% — CAPE Economic Research

CAPE Economic Research and Consulting has projected the headline inflation rate in May 2024 to rise to 34.37 per cent ahead of the official release of the inflation data by the National Bureau of Statistics (NBS).

It added that food and core inflation are expected to rise to 41.58 and 27.54 percent respectively.

The forecast is contained in the latest CAPE Economic Research and Consulting publication, which states that “Inflation is expected to further heighten in May 2024. Our forecast showed that inflationary pressure would heighten as the headline, food, and core inflation are expected to rise to 34.37, 41.58, and 27.54 percent respectively”.

According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate escalated to 33.69 percent in April 2024, a slight uptick from 33.20 percent in March, primarily fueled by rising food and energy costs.

In its projection, CAPE Economic Research and Consulting said, “The principal drivers shaping the forecast for headline inflation persist in food prices, the exchange rate, housing, and utility costs, contributing 4.70 percent, 0.38 percent, and 0.31 percent, respectively”.

It highlighted that price pressures are expected to remain heightened and remain above pandemic levels as tightening efforts continue to crystalise, adding that Nigeria’s Q2 2024 output growth is expected to be lower than Q1 2024 but remain positive.

“Forecast shows that inflationary pressure in Nigeria heightened in May 2024, with headline inflation rising to 34.37 percent,” CAPE further stated.

Nigeria’s inflationary pressure maintained its upward trajectory amid sustained multiple headwinds.

In April 2024, headline inflation accelerated by 0.49 percentage points to 33.69 percent from the 33.20 percent posted in March 2024.

On a year-on-year basis, the headline inflation rate was 11.47 percentage points higher than the corresponding month of April 2023, where it stood at 22.22 percent.

This indicates that the headline inflation rate had risen significantly over the past year, driven by persistent higher input prices, exchange rate issues, seasonality, and insecurity among others.

However, headline inflation slowed down to 2.29 percent compared to 3.02 recorded in March 2024.

This implies that the rate of increase in the average price level in April 2024 is less than the rate of increase in the average price level in March 2024.

Hence, the headline inflation rate is decelerating on a month-on-month basis.

The food inflation rate in April further jumped to 40.53 in April 2024 from the 40.01 percent recorded in March 2024.

Year-on-year, food inflation increased significantly by 15.92 percentage points from 24.61 percent in April 2023; this was driven by price increases in essential food items such as Millet flour, Garri, Bread, Wheat Flour prepacked, Semovita (which are under Bread and Cereals Class), Yam Tuber, Water Yam, cocoyam (under Potatoes, Yam and other Tubers Class), Coconut Oil, Palm Kernel Oil, Vegetable Oil, among others.

Interestingly, food inflation declined on a month-on-month basis to 2.50 percent relative to 3.62 percent in March 2024.

CAPE explained that as the second quarter of 2024 winds up, the global economy is showing signs of resilience.

This modest downturn, CAPE stated, is mainly due to the delayed effects of elevated interest rates. Nonetheless, there are ongoing risks, particularly from increasing geopolitical conflicts.

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