Nigeria’s inflation may hit 24% in June, highest in 18 years—analysts

Nigeria’s inflation rate, which stood at 22.41 per cent in May, rose for the sixth consecutive month to around 24 per cent in June, according to average projection by many analysts.

Economic intelligence reports by many economic and finance firms indicated that inflation rate had risen further as Nigerians grappled with continuing food shortage, amid rising energy costs and decline in value of naira.

in a report by the Nation, ahead of the release of the official inflation report by the National Bureau of Statistics (NBS), independent consumer surveys and econometric models indicated that inflation remained high, driven by general increases across several baskets of living costs. The NBS is expected to release its official inflation report for June 2023 today.

Inflation rate had increased from 21.9 per cent in February 2023 to 22.04 per cent, 22.22 per cent and 22.41 per cent in March, April and May 2023.

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Financial Derivatives Company (FDC), a leading independent economic and finance research firm, which took the lower band of the projections, stated that inflation could rise to 22.8 per cent in June, still within the highest point in 18 years.

FDC, which based its projection on a time series model and survey of major retail markets in the nation’s economic focal point, Lagos, said headline inflation is now about 13.8 per cent above the upper bound of the Central Bank of Nigeria (CBN)’s 6.0 to 9.0 per cent target.

According to FDC, the sustained rise in the general price level was mainly due to the spike in the food basket due to the Muslim’s festival of Eid ul Kabir, planting season effect and higher transport and logistics costs owing to the removal of the petrol subsidy.

FDC stated that its econometric model indicates that “inflation risks are elevated and an inflection point may not be reached anytime soon”.

Cordros Securities stated that it expected the headline inflation to rise by some 217 basis points to 24.58 per cent, within the range of average prediction by several analysts.

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But most analysts were optimistic that the ongoing fiscal and monetary reforms by the government would moderate costs of living in the foreseeable future, with the economy expected to gain a strong traction in the medium to long term.

President Bola Tinubu had last week declared a state of emergency on food security with a bouquet of direct policy interventions in food production, processing, storage, transportation and pricing.

These include immediate release of fertilisers and grains to farmers’ households to mitigate the effects of the subsidy removal.